Originally Posted By: 97K15004WD
Do any of you know any developers and how they got started? I'm trying to understand just how these guys get going and how they manage to raise so much money.....
It's not a get rich quick process.
Study the area you are interested in, ascertain the future growth patterns, and purchase real estate in the area while it can be done inexpensively. This is best done with income from another job, occupation, or business so the property can be parked without pressure to be getting income from it, if it's bare land, or something that can be rented out and depreciated if it is already built out with something. Then you wait for the "development" to come to you. This can be years, or even decades, or never. if it does, it's not unheard of for a five figure piece of property to be a seven figure piece of property a decade or so later, depending on what comes along. The best use at that point may be residential, commercial, or mixed. That part is hard to predict.
When it comes, you can sell the properties for a good profit, less the dreaded long term gain on real estate tax, and those profits can fund all or part of the properties you want to keep and develop. By that point, you can see where things are at and put up a spec building to lease out, or find a good long term tenant you can build out for, or start your own business in the property.
Personally, I think it's a good idea to always use as much of your own money as possible. You never want to own less than sixty or seventy percent. Use whatever money you make from the ones that work to offset the loss from the ones that don't, or are still in the wait, and use whatever profit is left over to keep the process going.
The people that I know that were (are) successful did it this way. The flash in the pan types can be over extended when the inevitable cyclical downturn comes along, and don't have staying power.