We spend a lot of time talking to first time investors. Today, however, we’re talking to people who already own a little bit of real estate. Some people inherit property, and they’re not sure what to do with it. Sometimes, the real estate is land that just sits there, and they wonder if they should use it for agricultural purposes, if they should sell it, or if they should do something else. We always recommend you consider developing the real estate. It’s not as difficult as it sounds.
Making Money in Real Estate Development
Start with your city offices. Cities always have a general plan with guidelines for property development and use of real estate. You can find out if your real estate is zoned for commercial or residential development. Doing your due diligence will always tell you a lot about what you can do with your property.
Property Type and Costs
You’ll find out if you can have a single family home or a multifamily home on your property, or if it has to be developed for commercial real estate. Don’t put a commercial piece of real estate in a residential area or vice versa. Talking to the city helps you plan.
After your basic due diligence, talk to contractors. Find out what it will cost to build a home on a piece of property. A contractor will give you an idea as to the cost, but they cannot provide the engineering cost of developing that property. Talking to professionals will go a long way in developing a property.
How to Make Money Off of Your Real Estate: Property Management Advice
Minimize your risk. You might want to consider a multifamily unit. Anything up to four units is still considered a residential property. If you have a building that’s more than four units, you’re in commercial territory, and the loan you get is going to be a little different.
Consider your risk tolerance. If this is your first project, you might want to consider one to four units for your residential income property.