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Lessons Learned in the Real Estate Development Process Jennifer Nevitt Casey Bravo Strategic Marketing, Inc. www.BravoStrategicMarketing.com Economics • Supply – The most innovative product design will be absorbed the most quickly in the marketplace – Product design should focus on customer’s “Quality of Life” solutions like sufficient parking and hot water, security, abundant natural light and storage, water pressure, noise abatement and energy cost reduction Economics • Demand – Location, Location, Location – Employment Drives the Success of Housing – Fluctuation in Interest Rates Creates Fluctuations in the Depth of the Market – The real estate developers with the most talented teams will sell the most inventory with the fewest discounts, talented teams are paid well with tremendous compensation packages Economics • Demand – Commissioning a third party market research study/ due diligence is the most important step a real estate developer takes after the land is under letter of agreement – A consumer’s ease in finding, viewing and visiting your product is essential for you to capture the available demand in the market • Internet 24/7 Global Market Place Product • Product Offering – Until your product offering is locked down, don’t open a sales center or advertise your product; losing credibility in the market will slow velocity exponentially – Focus your energies on opening the sales center and model with a locked down product offering; the market is more sophisticated now and won’t buy what it cannot see Best Practices • Sales & Marketing – Product design should focus on customer’s Quality of Life solutions like sufficient parking and hot water, security, abundant natural light and storage, water pressure, noise abatement and energy cost reduction – Measure the results; we cannot manage what we cannot measure Checklist • Product Presentation – Build the infrastructure; roads and parking to the sales center and model park – ease in parking is critical to the success of sales – Invest in fabulous state-of-the art signage and landscaping; your curb appeal defines your success in sales – Open the Sales Center – Open the Model Homes Hurry, Hurry………….. WAIT! • Market Introduction – “Burning off the bliss”- many developers emotionally attached to their deals are anxious and push to start advertising and marketing in a state of fear well before the sales center and product is ready to sell. Don’t waste your time, money and precious energy on announcing to the market too early. A patient, well orchestrated plan that goes to market after the product specifications are locked down will have the market’s respect. Best Practices • Sales & Marketing – Sales & Marketing budgets today are approximately 10% of Gross Sales Potential; no longer is 5% of sufficient – Talent+ is a great tool used by Ritz Carlton to profile potential sales team members [www.TalentPlus.com] – Be careful using ad agencies that insist on their logos being predominant on all collateral and marketing materials PromotionResidential Marketing Budget Allocation Labor- Sales Team Real Estate Brokerage Traffic Generation Marketing Administration Interior Design Interest Carry Marketing Consulting Fees Contingency 30% 20% 25% 3% 10% 10% 2% 100%