If you have an understanding on the way residential builders and developers make decisions on which properties to purchase, you will be more likely to reach your desired level of success in the real estate market. Many builders and developers look for properties based on geographical location. Others look for parcels that allow them to connect with a specific investor in submarkets, like age group, housing type, lifestyle and price range.
Choosing The Right Property
Real estate developers cast their nets in to the areas that they find the most appealing for their purpose, and then they sift through the potential candidates for acquisition. Often, they must look through several dozen properties 
before finding the one that they feel has the most potential for profitability. Frequently, developers will spend various amounts of money, effort and time to collect information before determining if they are making a wise investment.
When builders and developers find a potential property for acquisition, they ask these questions:
• What can I build on this property?
• How much can I build on this property?
• What kind of sale price can I get for what I build on this property?
• How long will it take for what I build to reach maximum sale value?
• What costs will I have to pay to build on this property?
The answers to these questions will cooperatively influence all of the decisions that the developers make from the time they first see the property, during contract negotiations, and all the way through to and beyond the time of closing.
The Right Frame Of Mind
In order to estimate the worth of a property for development, never think of it in terms of price per acre. Raw value comes from how much profit can be made from the property, how the property can be used and the estimated sale value of the end product. Remember to do your homework and know the true value of each property before making an investment.
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Tags: builder, developer, development, Investing, Property, property investing, property options blog, real estate market
{ 2 comments… read them below or add one }
Hi Sean,
I agree; this is a very important issue. I really think novice property investors could use a mentor for this purpose. You need to know how to crunch the numbers and what to look at to estimate the amount of profit you can make from each property.
Quite a substantial amount of planning goes into a proposed property developement. I had never actually thought through the process but what you have outlined here has opened my eyes a little more. Thank you.