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Old 02-08-2018, 11:36 PM
 
7,956 posts, read 8,678,945 times
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Also, don't forget to check zoning issues. We have some solid commercial buildings in my area that can't be added onto or is limited to only a certain additional height. Zoning issues limit these buildings to only a set height and not an inch more.
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Old Yesterday, 12:01 AM
 
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,924 posts, read 17,770,810 times
Reputation: 6263
Want to make a million dollars in RE development? Start with 2 million.

I'm just going to guess the OP has no expertise in the subject. Please don't think you can supervise those that know their trade. A construction manager is a much better option than hiring a General Contractor.

Did I say it takes 2 million? Make it 3. You can be an overnight success story 6 years later.
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Old Yesterday, 02:22 AM
 
Location: North Idaho
19,170 posts, read 22,501,789 times
Reputation: 33805
Yes, before you buy land, you can study zoning so you know what sort of business can go where, figure out what sort of commercial building might do well, then all you do is to provide money. You can hire engineers and architects. Hand the plans to a general contractor who specializes in commercial construction. He will get permits, hire equipment operators, get utilities hooked up, organize construction workers, and all you have to do is to keep writing checks.
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Old Yesterday, 03:57 AM
 
Location: East Coast Native in So Calif.
350 posts, read 118,483 times
Reputation: 281
OP,

First this is a very good thread topic. From my experience, there's three main backgrounds to get into real estate development 1) Real Estate/Finance 2) Construction/Bldg Trades 3) Engineering/Architecture. There maybe more but to me these are the staples. As you live in California, the biggest hurdles to you becoming a RE developer, even a small time one, are access to capital and funding to proceed with the project and property, securing the land/property and building a successful project on said land. Outside of these hurdles, the other major obstacle is political. Getting said public officials on board with your project is huge. Public officials (bureaucrats) and career politicians can be hard to influence. If there is alot of pushback to proceeding with project from angry residents, business owners and other constituents, etc. , you may have to send money on PR/public outreach, marketing, ads, etc. that you wouldn't have to spend otherwise.

If you're successful with all of this and complete said project, the next issue would be securing tenants (since you're discussing a commercial project). Why would tenants move into your commercial space from other spaces? What are the market drivers and benefits for tenants wanting to move into your space?
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Old Yesterday, 08:18 AM
 
24,461 posts, read 46,689,773 times
Reputation: 17357
My brother has been doing this type of thing in commercial for several decades...

The money to be made is finding a profitable path to bring it all together...

He recently created a lot going back to land deeds 100 years prior and was able to successfully make it happen... it was not costly in terms of money... but it was a process where his knowledge and resiliency paid off.

Most simply do not have the desire or know when to stop... a local developer had several hundred thousand and 4 years of time wrapped into creating a subdivision... lost his shirt and the city picked up the property for open space... the guy said he put 4 years of his life into the project with nothing to show.

Cost out you idea realistically... then evaluate based on what is available in the area... often, it can be less expensive to find property better suited or start from scratch.

No way am I trying to be negative... every successful business started somewhere...

I have seen what you are proposing in very high Real Estate Cost areas like San Francisco... people take existing property for a lot of reasons and spend a lot of money reshaping them... and in today's market can be well compensated for their efforts...

Even the best projects will fail due to market forces if the timing is bad...
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Old Yesterday, 09:47 AM
 
Location: Mendocino, CA
590 posts, read 284,015 times
Reputation: 383
I have a property that I want to tear down and rebuild (agree with the load consideration, plus the current building is rather bland-looking). I have to do this on a true shoe-string budget; therefore I'm exploring ways to do this as economically as possible.

On top of this, I am getting more and more interested in building stuff, after a few home remodal projects of my house. I especially like the design and artistic part of it. I really would not mind to making a 2nd career out of RE development.
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Old Yesterday, 09:56 AM
 
Location: Brentwood, Tennessee
34,371 posts, read 33,050,584 times
Reputation: 63266
Quote:
Originally Posted by rhbj03 View Post
I have a property that I want to tear down and rebuild (agree with the load consideration, plus the current building is rather bland-looking). I have to do this on a true shoe-string budget; therefore I'm exploring ways to do this as economically as possible.

On top of this, I am getting more and more interested in building stuff, after a few home remodal projects of my house. I especially like the design and artistic part of it. I really would not mind to making a 2nd career out of RE development.
In my city, permitting etc a total teardown costs more than a remodel. So if you leave the facade standing but then rebuild a completely new house around it, you can save tens of thousands of dollars.

Just keep learning about what's required in your area, and keep asking questions. Construction like this requires a lot of skill and common sense. You need to know what you're doing.
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Old Yesterday, 12:06 PM
 
Location: Western Washington
6,589 posts, read 6,588,227 times
Reputation: 10966
Real estate development on a shoestring budget is not for the faint of heart.

There will always be additional, unanticipated costs. Some projects will fail. External forces, such as economic or stock market swings will demolish your intitial assumptions.

You may get lucky and ride a wave successfully, or something small, like the discovery of asbestos containing materials behind the walls, could eat up any contingency funds you have
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Old Yesterday, 12:10 PM
 
Location: Mendocino, CA
590 posts, read 284,015 times
Reputation: 383
I already own the property I will be building, so that narrows down the questions a bit. I am pretty comfortable with the money aspect because the property is valued at $1000/sqft, and the construction cost should be way less than that. It's just that I want to continue to wholly own it after, therefore I have to deal with the financing all by myself.

And actually, what I want to build now, is in preparation to another bigger project I need to do eventually (definitely not now). I want to familiarize myself with the building process, so I can get involved in that project regardless of whether I use a general contractor or not. There definitely will be lots of major decisions for me and I don't want to rely on people telling me what to do.

Perhaps I can get your views on that bigger project to help my thinking as the project is a lot more complex.

Here are some basic facts:

-- Location: Flushing, NY (in NYC)
-- Existing property: 3 adjacent properties forming a nice rectangle corner lot 120'x60'. Currently they are 2 stories, 2 stories, and 3 stories respectively. Storefronts on ground floor, and apartments on top floors.
-- Age of current buildings: close to 100 years
-- Current zoning allows building up to 6 stories
-- Many neighborhood properties have started to be torn down and rebuilt to the maximum

How hard is it to do a simplest real estate development project?-lot.jpg

The properties currently generate OK income, but probably are not realizing their maximum potential. A re-built project, if done right, may achieve that. My task is to figure out:

1. What is the best thing to do? Is it do nothing and continue to collect rent? Or rebuild a 6 story building? And if the latter, what to build? Condo? Office building? Commercial space? Or, should I just sell the properties to a developer and reinvest the proceeds elsewhere?

2. How to finance the project (if the project is to go forward)? This is definitely beyond what I have funds for, therefore a construction loan is a must. I understand there are several ways to structure the financing and the repayment. What are the options and what might be the best? Who are the potential lenders if anyone other than banks?

3. How to minimize cost? This is what spawned this thread.

Any feedback is welcome. Again I'm at the brainstorming stage on this one.
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Old Yesterday, 12:21 PM
 
6,131 posts, read 6,553,678 times
Reputation: 10281
Quote:
Originally Posted by rhbj03 View Post
1. What is the best thing to do? Is it do nothing and continue to collect rent? Or rebuild a 6 story building? And if the latter, what to build? Condo? Office building? Commercial space? Or, should I just sell the properties to a developer and reinvest the proceeds elsewhere?
I would strongly suggest that you consider simply selling and investing in something else. If you want to build something, buy a lot and start from scratch. Or at least get something where there would be less demolition involved.
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