Why Is Real Estate Development So Hard To Get Into?

Have you ever driven by a massive redevelopment and stared in awe, wondering how someone got into that market and how they could put together the necessary capital to start an extensive real estate development? Real estate development at a small or large scale is a challenging field to break into, and there are many reasons why this is the case.

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Lack of Capital and Uncertainty of Costs

Even forgetting the massive expense of major redevelopments — an expense that often runs into the millions, particularly with commercial redevelopments — development is extremely expensive. There are many factors to consider, including:

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• Property acquisition
• Renovations or demolition
• Repairs
• Permitting
• Professional services

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All of this adds up quickly. Furthermore, development and redevelopment tend to have varying costs: you can have a budget one day and blow right past it. That variability is even worse today, with continual inflation and supply chain issues making it harder than ever to get labor, supplies, and more.

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This means that businesses need more capital and more contingency plans than ever. This is challenging for well-established firms and real estate agents. 

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Lack of Expertise

Consider all of the things you need to know to break into development:

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• Real estate
• Acquisition
• Planning
• How to navigate government agencies
• Building materials
• Market occupancy rates
• Finance

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You need a vast swath of knowledge to get into this field, and this is not knowledge that is easy to come by unless you've spent years in the real estate industry. However, this helps to explain why there are so many real estate partnerships: more often than not, a group of two or more people can come together and fill in the blanks. 

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Lack of Inventory

Housing and commercial inventory are at an all-time low. This is making it harder for developers to find opportunities for investments. Unfortunately, it's also sending prices through the roof, adding more barriers to individuals who may be interested in real estate development. 

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Rely on the Experts

If you want to get into real estate development, some experts can help you. At Infinity, we have years of experience assisting people to turn their investment dollars into dreams. Contact us today and learn more about how we can help you get started on real estate development.