Real Estate Development Guide: Key Steps and Project Types

Real estate development is the process of improving land or property to create something new, like land, homes, offices, or industrial buildings. It involves planning, design, financing, construction, and legal work to turn a concept into a usable space.

Let’s talk about real estate development, what it is, how it works, and why it matters in construction. We’ll also walk through each stage of the process, explore different types of development, introduce the key players involved, and cover common pitfalls to watch out for.

What is Real Estate Development?

Real estate development is the process of turning land or property into a new, usable space. It covers everything from planning and financing to design, permitting, and construction management.

In the real estate industry, development is what kicks off a project. It connects the early planning and legal groundwork with physical building activity. Real estate development determines what gets built, how it fits local needs, and whether it can be delivered profitably.

Real estate development is not the same as buying, selling, or leasing property. It’s about creating new value by building from scratch or improving what already exists. Real estate development also involves multiple experts, including architects, engineers, contractors, attorneys, and planners, to move a project from concept to completion.

What are the Types of Real Estate Development?

Real estate development falls into three main categories based on the condition and context of the land: brownfield, greenfield, and infill. These types affect cost, timelines, design flexibility, environmental risk, and permitting complexity.

1. Brownfield Development

Brownfield development involves redeveloping land that was previously built on. These are often old industrial sites, warehouses, or commercial properties. These sites may be vacant, underused, or even contaminated.

The goal is to repurpose land with existing infrastructure. Developers may need to remove hazardous materials, reconfigure old structures, or work around past zoning uses. Environmental remediation is often required under local regulations.

Pros:

• Cheaper land acquisition
• Faster entitlement process if zoning is already in place
• Existing roads and utilities reduce infrastructure costs

Cons:

• Environmental cleanup can be complex and costly
• Older buildings may have asbestos, lead, or structural issues
• Design flexibility is limited by existing site conditions

2. Greenfield Development

Greenfield development takes place on untouched land, such as farmland, open fields, or forested areas. It offers a clean slate for projects, free from prior construction or contamination.

Because the land is undeveloped, the process starts from the ground up. Developers are responsible for installing new infrastructure, obtaining full approvals, and complying with environmental impact studies.

Pros:

• Maximum control over site layout and building design
• Lower risk of hidden structural or contamination problems
• Easier to incorporate energy-efficient and sustainable design

Cons:

• High upfront costs for infrastructure (roads, utilities, drainage)
• Longer timelines for permitting and construction
• Environmental or community opposition may delay approvals

3. Infill Development

Infill development focuses on maximizing land use within already developed urban areas. It involves building on vacant lots, side yards, or redeveloping obsolete buildings within city boundaries.

It’s often used to combat urban sprawl and improve walkability. Projects typically align with local planning goals like density, mixed-use zoning, or transit-oriented development.

Pros:

• Access to existing infrastructure, transit, and amenities
• Strong demand in dense areas for residential and commercial use
• May qualify for local government incentives or fast-track permitting

Cons:

• Small, irregular parcels limit design and layout options
• Higher land costs due to prime location
• Zoning restrictions, community concerns, or parking requirements may delay approvals

Common Real Estate Development Projects

Most real estate development projects fall into five main categories based on how the property will be used. Each category comes with its own design standards, approval processes, and technical requirements. Understanding these types helps shape project goals, timelines, and budgets from day one.

1. Residential Real Estate

This includes properties built for people to live in, like single-family homes, duplexes, townhouses, condos, and multifamily apartments. These projects often require detailed site planning, access to utilities, and compliance with local zoning rules on density and setbacks.

2. Commercial Real Estate

Commercial properties are developed for business use. Common examples are offices, hotels, shopping centers, grocery stores, gas stations, and restaurants. These projects often need traffic studies, ADA compliance, dedicated parking, and approval from multiple city departments.

3. Industrial Real Estate

Industrial development supports manufacturing, logistics, and storage. This includes warehouses, factories, data centers, and R&D facilities. Projects usually need large parcels, truck access, and infrastructure like loading docks and utility-heavy systems.

4. Land Development

Land development involves preparing raw or vacant land for future use. It may include subdividing parcels, grading, and installing roads, drainage, or utility lines. This type of development often supports future residential, commercial, or mixed-use construction.

5. Special Purpose Real Estate

These are properties built for public or institutional use. Examples include schools, libraries, hospitals, parks, places of worship, and government buildings. They often require community engagement, specific funding models, and strict design and safety standards.

Who’s Involved in a Real Estate Development?

A real estate development project relies on a coordinated team of experts. Each person plays a specific role at different stages. Assembling the wrong team or bringing in the right people too late can delay permits, drive up costs, or stall construction.

• Developer: Leads the entire project. Makes key decisions, secures funding, and manages risks. Coordinates all phases from concept to closeout.
• Project Owner: May be the same as the developer or a separate party. Owns the land or property and usually funds or approves major decisions.
• Project Manager: Oversees the schedule, budget, and day-to-day progress. Acts as a central point between all parties to keep the project moving.
• Architect: Designs the building. Creates construction drawings, final plans, and supports the permitting process. Ensures the design meets code and end-user needs.
• General Contractor: Manages construction. Hires and supervises subcontractors, keeps the site safe, and delivers the project as specified.
• Civil Engineer: Designs site layout and infrastructure. Handles grading, stormwater systems, utility connections, and road access.
• Land Use Attorney: Navigates zoning laws, permitting, entitlements, and any legal issues tied to land use or property rights.
• Financier (or Lender/Investor): Provides the capital. May fund the full project or a portion through loans, equity, or other financial structures. Often requires detailed budgets and risk assessments before releasing funds.

Bringing this team together in the right order matters. For example, involving an architect before completing site due diligence can lead to designs that don’t meet zoning. Proper coordination also protects the project timeline from costly missteps.

Real Estate Development Process: Key Steps

Real estate development follows a step-by-step process that turns raw land into a finished, income-generating asset. Each phase is linked to specific decisions, approvals, and deliverables.

1. Pre-Development: Planning, Feasibility & Team Building

This is the stage where you decide if the project should move forward. The goal is to validate that the project makes sense legally, financially, and practically, before you invest time and money.

It’s about pressure-testing the idea against real numbers, site constraints, market demand, and available capital. Many projects fail here, not from poor design, but from poor planning.

Key activities:

• Define the project scope, budget, and timeline: Set clear goals. What are you building? Who is it for? How long will it take, and how much will it cost? Get early alignment between stakeholders.
• Conduct a feasibility study: Test the project's financial, legal, and market logic. This includes site analysis, comps, cost estimates, zoning restrictions, and preliminary return metrics. A well-run study can flag fatal flaws early and protect you from costly mistakes.
• Assemble your core team: Bring in the right professionals, including architect, civil engineer, an attorney, an environmental consultant, and a finance advisor. Each expert helps shape the project’s early assumptions and avoids rework later.
• Engage with local agencies and stakeholders: Meet with planning departments, utility providers, and community groups. Their input can surface early roadblocks like traffic issues, utility access, or political resistance.
• Structure your funding strategy: Outline your capital stack. Will this be funded by private equity, bank debt, joint ventures, or public incentives? Identify potential gaps and start lining up commitments.

2. Site Acquisition and Due Diligence

Securing the right site is one of the most critical decisions in real estate development. The goal is to secure land that supports the project’s design, budget, and timeline. You also need to avoid legal issues, environmental risks, or hidden costs. A site that looks good on paper can quickly become a liability if due diligence is rushed or incomplete.

Key activities:

• Identify and evaluate potential sites: Focus on location, zoning compatibility, access, visibility, and size. Make sure the site aligns with your project’s use, density, and parking needs.
• Negotiate the deal: Use a Letter of Intent (LOI) or purchase agreement with built-in contingencies. These give you time to investigate the property before committing to buy.
• Conduct zoning and code research: Check allowable uses, setbacks, height limits, parking requirements, and any overlay zones. Know whether rezoning or variances will be required.
• Review physical conditions: Assess topography, soil stability, drainage, flood zones, and utility access. Poor soil or lack of infrastructure can add major costs to site work.
• Run title and legal checks: Confirm clean ownership, legal access, and identify any liens, easements, or deed restrictions. Engage a land use attorney early to avoid surprises.
• Order environmental reports: A Phase I Environmental Site Assessment (ESA) is standard. If contamination is found, a Phase II may be required to test soil or groundwater.
• Secure site control: Finalize a purchase, option, or ground lease. Having legal control is essential before applying for permits, securing financing, or engaging contractors.

3. Design and Entitlements

These entitlements and design phases turn a project concept into a set of detailed plans that meet code, satisfy stakeholders, and pass city review. It’s also when you lock in entitlements or the legal right to build. The goal is to secure all necessary approvals, so construction can begin without delays.

Key activities:

• Develop schematic designs and site plans: Work with your architect to create floor plans, elevations, and site layouts that reflect project goals and zoning constraints. These plans become the basis for future construction documents.
• Coordinate with civil engineers and consultants: Integrate grading, drainage, parking, stormwater, fire access, and utility layouts. These technical drawings are essential for agency review and must align with city infrastructure requirements.
• Submit for land use approvals: Apply for zoning clearance, site plan approval, variances, or rezoning if needed. Know what’s allowed by-right and what will require discretionary review. Factor in public hearings and comment periods.
• Conduct supporting studies: Traffic impact studies, environmental assessments, stormwater reports, and arborist surveys may be required depending on location and project type. These documents often drive agency conditions of approval.
• Respond to agency feedback: Expect multiple review rounds. City departments like planning, public works, fire, utilities will provide comments. Make revisions, resubmit, and track deadlines closely to avoid unnecessary delays.
• Secure formal entitlements: Once all conditions are met and approvals are granted, you receive entitlements. This includes zoning clearance, conditional use permits, and signed-off site plans.

4. Financing and Final Planning

This is the phase where you get ready to build. You finalize funding, tighten your budget, and lock in the construction team. The goal is to have permits approved, money in place, and a contractor ready, so you can break ground without delay.

Key activities:

• Secure construction financing: Finalize commitments from lenders or equity partners. Expect to provide an updated pro forma, market comps, detailed cost estimates, and evidence of entitlements. Lenders will scrutinize your budget and team before releasing funds.
• Refine your pro forma and capital stack: Update all financial assumptions based on construction bidding, design changes, and soft costs. Review debt-to-equity ratios, interest reserves, and expected return metrics. Make sure your model still works under current market conditions.
• Finalize your budget and cost tracking systems: Break down the budget into hard costs (labor, materials) and soft costs (design, legal, insurance). Include contingencies, typically 5–10%, to cover change orders or pricing volatility.
• Finalize your budget and cost tracking systems: Break down the budget into hard costs (labor, materials) and soft costs (design, legal, insurance). Include contingencies, typically 5–10%, to cover change orders or pricing volatility.
• Complete permit-ready construction drawings: Convert schematic and design development drawings into a full construction set. This includes architectural, structural, MEP, civil, and landscape plans ready for agency review.
• Submit for the building permit: Permitting timelines vary by location, but delays are common. Track review cycles, respond quickly to corrections, and confirm which approvals are needed before construction starts.
• Select the general contractor: Issue an RFP (Request for Proposal), collect bids, and evaluate based on experience, cost, schedule, and fit with the construction project type. Consider negotiating a GMP (Guaranteed Maximum Price) to cap construction risk.

5. Construction and Execution

This is the most visible phase. But it is also the one with the highest risk. Every delay, mistake, or missed inspection has an actual cost. The goal here is to execute the plan precisely: build a safe, code-compliant structure that meets design specs, stays within budget, and hits your timeline.

Key activities:

• Mobilize the site: Issue a Notice to Proceed to the general contractor. Set up site access, temporary power, fencing, signage, and safety measures. Confirm insurance, labor compliance, and communication protocols.
• Perform sitework and prep: Demolish existing structures if needed. Grade the land to meet drainage plans. Install stormwater controls. Connect utilities, including water, sewer, electric, gas, and data. Any delays here push the entire schedule.
• Build the foundation and core structure: Lay footings and pour the slab or foundation system. Then move into framing, steel erection, or concrete structure work, depending on the project type. Precision here reduces downstream errors.
• Install MEP construction systems: Coordinate mechanical, electrical, plumbing, and fire protection. Use a clash detection process if working from BIM models to avoid costly rework in the field.
• Manage subcontractors and sequencing: Keep trades aligned with the master schedule. Watch for delays caused by material lead times, inspections, or weather. Regular site meetings help resolve issues early.
• Track progress, quality, and costs: Use construction management software (e.g., Mastt) to log RFIs, construction submittals, daily reports, and change orders. Compare actual progress to baseline schedule and update stakeholders.
• Maintain safety and compliance: Conduct routine safety inspections. Ensure the jobsite meets OSHA standards and local building codes. Track inspections to avoid delays in final approvals.

6. Project Closeout and Operations

Closeout is where construction ends, but your liability doesn’t. This phase wraps up the legal, financial, and operational details that can affect safety, profitability, and long-term performance. It’s your last chance to confirm the project was built as approved, inspected, and paid for.

The goal is to exit construction cleanly, meet all occupancy requirements, and hand off a fully functioning asset, without loose ends.

Key activities:

• Create and manage the punch list: Visit the site with the general contractor and design team. Identify incomplete or defective work, then track every correction until resolved. Don’t accept vague timelines; assign owners and deadlines.
• Complete inspections and obtain the Certificate of Occupancy (CO): Schedule final inspections with building, fire, and safety officials. The CO confirms that the structure meets all code requirements and is legally fit for use. No leasing or operations can begin without it.
• Finalize construction contracts and documentation: Verify lien waivers, pay final invoices, and close out all subcontracts. Collect warranties, as-built drawings, operations manuals, and maintenance plans. These documents are critical for long-term management.
• Convert short-term financing to permanent debt: Submit required closeout reports to the lender. Once the CO is issued and occupancy thresholds are met, refinance your construction loan into a permanent mortgage or long-term note.
• Transition to operations or disposition: For rental projects, start lease-up and tenant onboarding. For for-sale assets, initiate marketing or finalize sales. If handing off, ensure the property management team receives training, documents, and a clean groundbreaking and turnover.

Common Mistakes in Real Estate Development (and How to Avoid Them)

Real estate development projects don’t usually fail because of one big issue. They fail because of early oversights that snowball. Rushing due diligence, misjudging costs, or choosing the wrong partners can quietly derail progress long before construction begins. These common mistakes cost time, money, and credibility.

Here’s what to watch out for and how to stay ahead of them.

Skipping Due Diligence to “Save Time”

Some teams rush to secure a site or push into design before doing full legal and technical checks. But skipping zoning research, environmental reviews, or utility confirmations can lead to major delays or force a redesign halfway through.

💡 Solution: Never skip early due diligence. Budget time and cost for zoning checks, environmental reports, utility mapping, and soil testing. Use purchase agreements with contingency periods that give you time to investigate before closing.

Underestimating Soft Costs

Many teams focus on construction costs but forget how much design, legal, permits, and approvals add up. Soft costs can easily reach 20–30% of the total budget, especially in urban or regulated areas.

💡 Solution: Build out a soft cost schedule from the start. Include design, permits, legal, consultants, insurances, and lender fees. Review actuals against forecasts monthly. Don’t treat soft costs as a fixed percentage. Scope them line by line.

Hiring Based on Lowest Bid

Choosing consultants or contractors based on price alone often backfires. Inexperienced teams may miss deadlines, underperform, or cause rework. What looks cheaper upfront can cost far more later.

💡 Solution: Prioritize experience and track record over price. Vet teams based on past projects, communication, and risk management, not just their number. Use weighted scoring in RFPs that factors in quality, not just cost.

Overbuilding Without Demand Validation

Developing the wrong type of property for the area can lead to slow lease-up, low demand, or forced price reductions. This often happens when plans rely on trends instead of actual market data.

💡 Solution: Conduct a market study before locking in your development program. Validate property type, unit mix, and pricing using local comps. Make adjustments early before entitlements or construction drawings limit your options.

Failing to Budget for Unknowns

Unexpected conditions, like bad soil, code changes, utility relocations, can derail even well-managed projects. Without a buffer, one issue can wipe out months of progress or margin.

💡 Solution: Build in contingency from the start. 5–10% is typical, more if you’re working on infill, brownfield, or rezoned land. Track open risks throughout the project and set aside reserves based on exposure.

Best Practices for Successful Real Estate Development Projects

Real estate development projects succeed when teams make informed decisions early and stick to a clear process. These best practices help reduce risk, improve coordination, and keep projects on track from planning to completion.

Use Data to Guide Every Decision

Don’t rely on gut feel or outdated assumptions. Strong projects are built on verified demand, clear financial targets, and a realistic understanding of site constraints.

💡 Tip: Run feasibility studies and market research before finalizing design. You can also commission a third-party feasibility study, even if internal models look strong. Use GIS data, rent comps, and zoning overlays to understand what the site can support. Run different scenarios in your pro forma (best case, base case, downside) before locking in your capital plan.

Bring in the Right People at the Right Time

Not every expert is needed on day one. Bringing in team members too early wastes budget. Bringing them in too late causes rework and delays.

💡 Tip: Engage legal and engineering consultants early. Bring in architects once you’ve confirmed zoning and site issues. Involve your land use attorney and civil engineer before finalizing your site plan. They’ll spot entitlement red flags early. Hold off on contractor selection until you’ve completed 50–70% of construction drawings, so you can bid accurately and avoid change orders later.

Keep Design and Approvals Aligned

Designing without checking zoning or code compliance leads to revisions and hold-ups. Entitlements and design must move together, not in isolation.

💡 Tip: Hold weekly design/entitlement syncs. Share planning department feedback with your architect in real time. Track open agency comments in a shared log so nothing gets missed across departments.

Control Scope Changes

Unmanaged scope creep inflates costs and delays timelines. Without structured approvals, even small changes can lead to big impacts.

💡 Tip: Use stage-based approvals: freeze scope at 30%, validate pricing at 60%, and issue for permit at 90%. Require written sign-off before changes are made at each stage. Align this with your lender’s draw schedule and your contractor’s contract terms and conditions.

Stay Flexible with Financing

Markets shift fast. A rigid capital plan can fall apart if interest rates rise or equity partners pull back. Flexibility is key to keeping the project funded.

💡 Tip: Structure your financing with buffers. Get LOIs from backup lenders or providers. Build a version of your financial model with rate shocks and project delays to test where your risk exposure is highest. Lenders will expect this level of detail.

Real Estate Development Software and Digital Tools

Real estate development projects move faster and smoother when teams use the right digital tools. Software helps reduce manual tasks, improve team coordination, and give owners real-time visibility into cost, schedule, and risk.

💡 Pro Tip: Use a capital project platform like Mastt to manage performance across all your developments in one place. Get live dashboards, risk scoring, and instant visibility. No more spreadsheets or delayed updates.

Final Thoughts on Real Estate Development

Real estate development is complex. But, with the right process, people, and tools, it becomes a repeatable path to building successful projects.

Whether you’re planning a greenfield build or managing urban infill, staying focused on feasibility, coordination, and risk management is what keeps projects moving and profitable. Start smart, stay structured, and make every phase count.