WHAT IS THE ROLE OF THE REAL ESTATE DEVELOPER IN THE USA?

 WHAT IS THE ROLE OF THE REAL ESTATE DEVELOPER IN THE USA?

When you walk around the United States, as everywhere else in the Western world, you are surrounded by real estate, whether it be homes, business premises, offices, retail, warehouses, healthcare or educational facilities. These buildings have one thing in common: they are the result of real estate development, also known as "real estate promotion." Thus, a real estate developer in the USA is simply in charge of building the world around us, creating and modifying the environments in which we live and use our daily lives.

These places, frequented by Americans to work, shop, or eat, are the result of the role of the real estate developer, in conjunction with many different trades. In this article, Investir.US invites you to take stock of the role of the real estate developer in the United States and discover the different facets of real estate development across the Atlantic.

Real estate development in the United States: what are we talking about?

Sometimes called "real estate promotion" or "real estate development", the process consists of developing buildings or land in order to optimize their use value.

The real estate development business in the United States has several different facets:

• The purchase of land and the construction of real estate on it;

• The renovation, extension or improvement of real estate;

• The transformation of goods from one type of use to another.

Real estate developers in the USA are, in a way, entrepreneurs responsible for real estate development. Their activities are based on a simple principle: the goal of a real estate developer in the USA is to add value to land or property.

By achieving this objective, the developer can hope to profit from the development. This is one of the main objectives of real estate development; however, it is not the only one. The concept of developing property to achieve its highest use value is fundamental to the real estate development process.

Real estate development is distinguished from other activities by the fact that it seeks to preserve and generate wealth, such as real estate investment and the potential to generate significantly higher returns.

Of course, while real estate development can generate significant profits, zero risk doesn't exist. As such, many people consider real estate development to be complex and risky. Indeed, without adequate knowledge, skills, or planning, the risk increases. It is therefore up to the real estate developer in the USA to ensure that risks are minimized as much as possible, by all possible means.

The Different Faces of Real Estate Development in the United States

While profit is an important motivation for a real estate developer in the USA, there may also be a social motivation on the part of the professional, to provide housing, retail, office, warehouse, and educational facilities necessary to create a local community.

Real estate developers in the US focus on both residential and commercial development. For some, there is significant overlap between the two.

Residential property developers can integrate commercial buildings into projects that are initially purely residential. Adding a shop to the ground floor of a residential building is a good example. Similarly, commercial developers can integrate residential properties into fully fledged commercial projects. Developers can also create mixed-use developments, which can more accurately meet community needs by planning and diversifying risk and revenue streams within a development project.

There is another distinction in real estate development in the United States. This is between developers who develop properties to sell and those who develop properties to hold. The former expect to profit from their investment, while the latter focus on profitability in the more or less long term. The choice of real estate developer strategy in the US depends on the objectives of the professional and/or individual investor. While both strategies are perfectly feasible, the results obtained vary.

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Real estate developer in the USA and developer: what are the differences?

If you look closely at the signs along the roadsides in the United States, some of them say "Direct from Developer." Clearly, the building in question allows for a direct purchase from the builder, thus eliminating any middleman.

Developers develop properties, and builders build... This means that a real estate developer in the U.S. invests in raw land, obtains the necessary permits, creates building lots, and installs sewers, water and electrical lines, streets, and curbs. The builder, on the other hand, comes in when everything is in place to erect the building(s).

However, a builder can also be a developer. In fact, many in the United States wear both hats. Since construction and real estate development are two distinct and different tasks, most large housing companies purchase ready-to-build land from other companies.

Things have changed a lot, as real estate companies used to operate vertically, purchasing land, obtaining permits, making improvements, building, and selling it themselves. Today, builders also consider themselves manufacturers. Working on a just-in-time basis, they hold their land for as short a period as possible before selling it.

In the US housing sector, there is also a distinction between the builders themselves. On the one hand, there are "production" builders and, on the other, "custom" builders. There are also "semi-custom" builders (which could be translated as "partially custom") and "mass" builders.

Production builders are those who build homes in large numbers. Mass-produced builders, on the other hand, are large builders who produce thousands of homes each year, across the country and, very often, in multiple markets.

Today, many real estate developers allow buyers to customize their plans and fine-tune their finishes. As such, anything is possible for buyers, who benefit from considerable flexibility, as it is possible to knock down one or more walls as well as add rooms. This is why they are referred to as "semi-custom builders," offering buyers the opportunity to adapt a standard plan as they see fit.

A true custom builder, on the other hand, builds unique homes, often designed by a particular architect, and whose plan cannot be duplicated.

A semi-custom home may be completely different from others, but it starts from the same principle, whereas a custom home is different, from the start.

Understanding certain concepts related to real estate in the United States is essential when considering investing there. This includes the role of a real estate developer in the United States. Whatever your project, whatever your goals, contact a US real estate specialist who can assist you in French and guide you step by step. Contact us for a free consultation to discuss your project.