The real estate development industry is a multidimensional, complex field requiring many types of involvement and expertise. While many of us are familiar with the roles of developers and architects, other vital players help get projects off the ground — or not!
In this article, we’ll explore some of these roles and explain how they impact your real estate investment portfolio.
Investors
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Investors are the people who put up the money to make a project happen. They can be individual investors, but they can also be groups of people, such as institutions (like banks or investment firms), faith-based organizations, etc.
Real estate syndication is a common way for investors to pool their resources and provide funding for projects. When you syndicate your project, you’re selling shares of ownership — like an IPO, but for real estate. The investor puts up some cash and receives a share of the profits (and losses).
Investors play an essential role in real estate development because they provide capital to fund new developments and other projects that support affordable housing needs.
The primary benefit of an investor-owned development is that it’s self-sustaining. Unlike a project that relies on government funding, which can come with many strings attached, an investor-owned project doesn’t require any outside funding. That means residents pay their rent and utilities and do not need subsidies or other forms of financial assistance from the government.
Large institutions
A large institution is a company or organization that has a significant amount of assets and capital.
Banks are a good example; they have millions of dollars in assets and can lend that money to developers who want to build new projects.
Insurance companies also fit this category because they often invest in real estate and other investments – such as stocks and bonds.
This includes residential homes, apartments, and commercial buildings such as offices and factories.
Public Policy Groups
Public policy groups represent the interests of a group of people. Examples of public policy groups include the Sierra Club, AARP, and the National Rifle Association (NRA).
In real estate development, several types of public policy groups can be involved with your project –
Public interest groups
Community advocacy organizations
Environmental advocacy organizations
Community-based organizations
Community development corporations
Government, Local, and/or State
The government can provide incentives to developers in the form of funding for affordable housing or financial assistance with infrastructure improvements. The government may also be able to assist in zoning issues – as well as other regulations, that would make it easier for developers to build homes in certain areas.
Without it, they might not even be possible without a significant private investment (which could come at too high a cost).
Non-Profits, Church Groups, and Faith-Based Organizations
Non-profits, church groups, and faith-based organizations are good sources of funding for real estate development. They can provide tax benefits to investors and help the community by funding projects that wouldn’t otherwise be possible.
It’s also a great way to get your foot in the door with these organizations if you’re interested in commercial real estate development.
There you go!
We have seen many different types of investors in real estate development. These include large institutions such as banks and insurance companies, public policy groups who seek to influence policy on issues such as environmental protection or community development, and government agencies at local, state, or federal levels that fund projects with tax dollars or use eminent domain laws to acquire land for public use (such as roads).
Non-profits such as churches or community organizations also play a role in this process by providing services such as affordable housing for low-income families.