After more than a decade of experience in purchasing and improving distressed properties, Rich Von has noted several different kinds of real estate developers. Each developer brings his or her own special expertise to a project, says Rich Von. For the consumer, often the builder is the one primary point of contact, but these other players also perform an integral role to any building project. Below, Rich Von outlines those types of developers.
- – Equity Developers— Rich Von says these developers are the financial force behind a project. Providing a certain amount of capital to get a project off the ground, equity developers put their own financial resources on the line to make a project happen. The percentage of equity owned by a developer/development firm can vary from project to project, adds Rich Von.
- – Real Estate Investment Trust (REIT)—A REIT is a trust that invests 75% of its own capital into a property with a large majority of the profits distributed to shareholders, according to Rich Von. Usually REITS invest in income-producing property, like shopping centers and hotels.
- – Fee Developers—Fee developers put projects together for a fee with the understanding they will not earn a profit from the development, says Rich Von.
- – Government Developers—According to Rich Von, government entities regularly develop projects using public funds, including government buildings, state parks, and schools.
- – For-Profit Developers—Commercial developments, like a new store that is part of a national retail chain, are strictly for-profit, explains Rich Von, generally using the chain’s existing funds for development.
- – Small Developers—Some developers simply build a small family home or two on an annual basis, notes Rich Von.
According to Rich Von, some projects require a combination of several of the above development types, with the combination maximizing the success and minimizing the personal economic impact of a development.