Remember the big picture. This phrase became indelibly etched on my mind by my father when I began learning the craft of being an attorney. Just before the last real estate recession, many people who were trying to make a quick buck in real estate let the fundamentals go out the window; they were looking for short cuts, but they found disastrous results. Now that the real estate market is heating up again, it is a good time to remember fundamentals and the big picture.
Understand market dynamics
Development is one of the most rewarding pursuits one can undertake; it is also a complicated game full of traps for the unwary or the panicky. Big picture components include market dynamics, such as the overall business climate of an area and whether there is a need for the project in the area. Market dynamics also include the processes, regulations and steps necessary to bring a project to completion within a jurisdiction. You must familiarize yourself thoroughly with the market, and in particular with the local politics, issue traps, idiosyncrasies and other folkways of a jurisdiction as a part of this understanding. People may attempt to replicate their old experiences in a new place, only to run headfirst into a challenge that ends up costing a great deal of time and money.
You are regulated
Once the basics are understood, you can turn your attention to identifying sites that might accomplish established goals. At this stage, careful consideration must be given to issues of title, zoning, environment, stormwater and other permitting considerations. Washington’s regulatory environment continued unabated during the recession, and a host of new regulations can take you by surprise if you don’t familiarize yourself with them at the beginning of the project. Simply put, old ways may not work with the new regulatory regime.
Prepare a plan and surround yourself with experts
So how do you go about pulling off a successful project? First, develop a game plan and plays early on. Before the kick-off of a project, anticipate all issues that may arise. Be prepared to address those issues head-on; they do not go away. Most successful projects involve skilled experts. Assemble your team early to identify technical issues that may arise, and address them before they become a problem. What distinguishes a good team from a great team is knowing in detail the challenging issues around development within a particular jurisdiction. Don’t try to avoid this expense. By anticipating staff or neighboring property owner concerns, issues can be accommodated through design or mitigated or managed in such a way that they never come to light. This saves time, money and big headaches in the long run.
Have a plan B
Too often people get so absorbed with trying to complete a project that they lose all business sense. Know your project limits – internally and externally. Delay can be your worst enemy. If compromise on certain points is in the project’s best interest, know what solutions you can and can’t live with. Unwillingness to compromise is a common mistake. And if a project is going to languish in appeals to the courts for years and you don’t have the resources to see that through, you might want to exit and leave that fight for another party.
Along with your plan, you need sound knowledge of the fundamentals if you are going to succeed in the business of land development. The extra time spent in studying the big picture will save you time and money in the long run.
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