Purchasing and owning real estate is a lucrative and effective investment strategy due to its high probability of investment return and is generally a profitable business venture. Investing in residential and commercial properties is a passive income every month and is always in demand, especially for residential units, since having a home is a basic necessity.

When you have a piece of land or property that you want to renovate or transform into a business opportunity, the best thing to do is work with professionals to maximize your realty. But who do you rely on to ensure the success of your investment?

The two sectors that always come up for real estate projects are property development and construction. These professions worked hand-in-hand to develop and build the structures we see every day. Although developers and builders often work together, they come from different industries with different responsibilities.

To better understand the difference between development and construction, we should first identify their roles in real estate and their importance to your investment.

What is Property Development?

Real estate development directly means developing properties to add value through renovation, extension, and redecoration. They often buy their land or partner with a realty holder to convert the space into either a residential or commercial property.

You can see the outcome of property development in every place you go — from schools, buildings, office spaces, hotels, and malls; these structures would not cease to exist if not for the contribution of this industry.

It’s a business that includes many elements, such as building a structure from the ground up, purchasing undeveloped land, or purchasing a built property to knock it down and make something new.

Who is Involved in Property Development?

Several people with different skills and expertise are involved in property development. Building property, especially from the ground up, requires professionals with a deep understanding of specific tasks, such as obtaining permits, designing the property layout, budgeting, project management, and planning consultants.

Being a property developer means overseeing the project and ensuring that all procedures are running smoothly and all steps required are appropriately handled. Developers must identify the crucial factors involved in a successful project, especially the finances and regulations governing the area.

The Property Development Process

To gain a general concept of how the whole process works, we have simplified property development into seven steps:

1. Pre Purchase Stage

• Assemble your development team
• Secure capital finance
• Secure and inspect the development site
• Understand potential risks
• Conduct feasibility study

2. Negotiating Contracts and Purchasing

• Hire an expert buyer’s agent
• Price negotiation
• Read and understand the contract
• Purchase the land or property

3. Town Planning and Development Approval

• Enlist a town or urban planner and land surveyor
• Understand city guidelines and local regulations
• Apply for planning permits
• Secure council approval to proceed

4. Working Drawing and Documentation

• Hire an architect
• Consult with engineers such as Civil and Structural
• Start the design planning
• After receiving the design approval, obtain a building permit

5. Pre Construction

• Find a project manager
• View and compare prospective builders
• Determine the materials for the project
• Review and sign the contract

6. Construction

• Plan and prepare for unexpected delays
• Assemble the site
• Oversee the construction
• Obtain certification from the building surveyor during specific stages of the project

7. Completion

• Decide whether to sell the developed property or keep it as an investment venture
• The advantage of selling the property is a fast return on investment
• The advantage of retaining property is receiving a regular passive income

The process of real estate development is challenging, especially for first-time developers. It would be best to do research, surround yourself with an experienced professional team, and secure sufficient funding to buy and develop a property.

What is Construction?

The construction involves the creation of residential, commercial, and industrial buildings and engineering projects such as roads, bridges, and utility facilities. Aside from building projects, the industry also covers renovations, additions, maintenance, and repairs.

If not for the construction sector, we won’t have homes to live in, offices to work in, restaurants to eat from, and hospitals in case of emergencies, to name a few. They’re a vital industry that creates living and workspaces that connect the community and improve our way of living.

Who is Involved in Construction?

It’s necessary to have a cooperative team with their own set of skills and expertise to complete the project on time. Having experienced team members and clear communication throughout the process can guarantee a successful outcome. As such, here are the critical members of a construction project.

• Designer
• Architect
• Consultants
• Principal and Subcontractors
• Project Manager
• Engineers
• Builders and Workers

One of the most critical elements of every construction project is to be able to finish as scheduled. Any delays can cause a significant dent in the budget since you have to pay for additional wages and equipment rental fees. It’s also necessary to employ a contractor with a network of suppliers for equipment and material to save costs. If you’re looking to add a roof hatch to your property, browse through the Best Roof Hatches Category to get the best deals.

The Construction Process

Creating buildings and homes is a very complex and detail-oriented process. Regardless of the facility, there are standard steps that you need to follow to ensure the success of the building project and establish safety. Although some tasks may apply different methods, here is an overview of the various stages in construction projects.

1. Creating a Concept and Design

• Discuss design goals and building concepts with the architect and designer
• Create floor plan
• Create a schematic design after establishing the building’s size and layout
• Organize ideas to create a cohesive strategy
• Ensure that the final project is up to code

2. Building Permits

• Obtain various permits throughout the project
• Secure entitlements if applicable
• Seek assistance from your Project Manager

3. Pre-Construction Phase

• Calculate costs and establish work schedules
• Set a meeting with the project team (project manager, field engineer, contractor, superintendent, and health and safety manager) to finalize preparations
• Create specific objectives for each team member
• Evaluate the site
• Create cost estimates for materials and wages
• Identify potential issues

4. Procurement

• Hire laborers and field workers
• Purchase or rent equipment
• Communicate with material and equipment suppliers

5. Construction Phase

• Set a meeting to address logistics, storage, contact details, safety protocols, and quality control
• Work shall commence on-site with the supervision of the project manager
• Conduct quality inspections
• Review substitution requests and change orders
• Address safety issues on-site

6. Post-Construction or Closeout

• Building turnover
• The owner will receive closeout information, including warranties and manuals
• Apply for certification of occupancy
• Building inspection
• Create references or testimonials to the project team

These steps serve as a general overview of a building project from inception to completion. However, construction projects often have a linear process involving several tasks, designations, and decisions. Although these projects are unique, they will most likely follow the same cycle.

So, Are They Different?

A quick answer is yes, as property development and construction come from varying sectors with different roles and responsibilities. In a nutshell, real estate development is the process of purchasing property to develop it for selling purposes or serving as a long-term investment.

On the other hand, construction is an extensive industry that includes building creation, carpentry, road construction, renovations, and repairs. It’s also one of the oldest industries globally, with a market size of trillions of dollars, making it highly profitable and valuable.

Although both industries are generally different, they are essential components in the real estate business as the two professions work closely together to guarantee the project’s success.