Terranado Insider

In the last couple of articles, we discusses the importance of project feasibility and the various components involved. This week, we will talk about how a real estate developer can set up a small shop. Real estate development firms are generally not that large, and the majority often are comprised of a couple of partners who shared a common interest and decided to band together. Exceptions to the rule include large real estate development firms such as Hines, Tishman Speyer, Westfield, and others. By nature, real estate developers are entrepreneurial and must control costs tightly.  Cash is king.  Some of the most successful real estate developers started their companies out of their home offices.  Since real estate developers are often on a tight budget, let’s discuss some of the basic tools that are needed to establish your presence.  For those of you who like reading a book, check this book out.

Real estate developers are often on the “Go”, and for those of us who are on a tight budget, real estate developers must be reachable by the outside world by telephone and email.    An excellent solution I recommend for real estate developers for a cost effective mobile telephone system can be found at Ringcentral.  By doing so, the real estate developer will have a working office phone number where he is always reachable and be able to receive faxes anywhere.  If one prefers to have an office, IP phones are your most cost effective solution for your staff.  To obtain a working email, hosting for your website, and for all of your interest needs, Hostgator offers an excellent choice.  Now that you are connected to the professional world with internet, email, and phone, you are ready to get down to businesses and look for additional staff to join you.

Real estate developers start up a small shop with other individuals that they know.  However, the real estate developer is always in need of additional staff.  Staff compensation is always an interesting question.  Some key staff that a small real estate company may look for include someone to handle acquisitions and dispositions, a leasing broker, a project/construction manager, and a property manager.  Compensating project managers is always a tricky proposition for a real estate developer for he seeks someone who will be there from the start of the project to its completion.  A real estate developer will often structure a monetary base salary along with a vested equity component to entice a project manager to stay though out the entire project.  A lengthy discussion can be ensued about the various methods to structure equity compensation which may be tied to project milestones.  Other developers may prefer to outsource some of the key jobs that may include enlisting the services of a freelancer which can be found at sites such as Elance or Odesk.  The real estate developer is in control of the project and managing his staff to ensure that the project is delivered on time and under budget.  Whichever method the real estate developer chooses, he is the person ultimately responsible for its success or its failure.

Hiring the right staff is critical.  Often, a small real estate developer will not have an engineer, an architect, an environmental consultant, a survey, and others on staff.  The work is often contracted to other firms.  For example, a real estate developer will often contact an environmental consultant such as EMG, PSI, or Building Diagnostics to assist with conducting a Phase I study for the property. Acquiring the expertise needed for a development project is the real estate developer’s responsibility.  The real estate developer manages the entire process and his team of consultants to accomplish the task at hand.  Larger real estate developers may have in-house staff such as architects and engineers.  However, smaller real estate developer s often do not have the resources and the capacity to enlist a full-time staff with the wide range of expertise needed to complete the job.  In our next article, we will discuss the various team members that a real estate developer will employ to get his project to the finish line.

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