A developer is a person or company that deals with various real estate investments. Usually, development companies have specialization in one category – office, commercial, residential or industrial buildings. You can find developers dealing with various types of real estate much less often. In order to become a developer, you first need to obtain the appropriate permissions. What do developers do and how much do they earn? We answer in this article. We invite you to read it
What does the developer do?
It is widely said that the developer is responsible for the construction of housing, but he is not just doing it. A construction developer appears most often as a company, less often as a natural person. He deals in the construction of flats, blocks, single-family houses or housing estates.
The largest enterprises specializing in this industry are not limited to the single-family or residential segment. They also build sports facilities or facilities for public use. However, smaller enterprises often specialize in building facilities in only one industry – single-family houses or flats.
The developer is responsible for:
- supervising construction and controlling work progress,
- location of the investment,
- sale of apartments or houses,
- project supervision,
- final finishing effect.
Work as a developer
To start your project, the developer must first obtain it. He receives an order or starts a project himself to earn cash. He buys land, takes care of all necessary formalities, and then begins construction. The developer may hire subcontractors with specific specialties. In such a situation, he only deals with the supervision of the work and sometimes takes back the properties he has already placed. The next step is the sale of apartments. Prices for such apartments may vary depending on the location in which they are located. The larger the agglomeration, the higher the prices of flats will be. Demand is also important. If it is small, then the price is also lower. In addition, the finishing of the apartments is also important. Usually they are in so-called “Developer status”. This means that the future tenant will be required to finish and arrange it on his own. There may be situations in which the apartments are at the beginning of development, but then their final price is much higher than the previously mentioned “developer status”.
What is the developer status?
The developer state is simply a flat, in which basic installations such as electricity, plumbing, etc. were made, and also plasters, screeds, and sometimes also floors, but not necessarily. Increasingly, developers do not want to go into finishing work if there is no such need. Unless it is the buyer’s order. In this case, of course, for paying additional fees, they can undertake any work on the detailed finish of the apartment.
What are the developer’s earnings?
The question of how much a developer earns depends on the city in which he undertakes the investment. It is assumed that, on average, its gross profit may amount to between 14 – 25% of the profit on the sold property. There may be projects from which the developer will make a profit of up to 40% of the price of the apartment. Everything is influenced by many factors, such as location, performance, finishing of the apartment and the developer’s determination. The cost of housing determines, among others labor cost, land price, project cost, VAT, and the developer’s cumulative profit. All these and other unforeseen costs are added to the final flat prices.
Housing and commercial developer
Developers are responsible not only for the construction of new apartments or single-family houses, but also commercial buildings: commercial, office or hotel. Each of them precisely determines who its offer is addressed to. The B2B (Business to Business) sector works mainly for commercial developers, while in the B2C (Business to Consumer) sector there are mainly residential developers. It is not said that the company needs to narrow down to only one activity – residential developers are more often looking for other markets to be able to expand their business and increase the amount of sources of income.
What is the Developer Act?
The Development Act, in force since 2012, has brought many safeguards and facilities. It was primarily aimed at securing the incoming finance to the developer. In addition, it has an informative function, because thanks to it every buyer gets an information prospectus, thanks to which he becomes more aware of his decisions. Pursuant to this Act, each contract created must be in the form of a notarial deed. In addition, regulations impose on the development company the opening of a trust account, which will be affected by the money received from the buyer.