In this article you will discover the characteristics, functions and differences between a real estate developer and construction company.
although sometimes the same company can be developer and builder of a real estate project, the truth is that these two agents have a different role in real estate. Next, we show you in greater detail.
What is a promoter?
A real estate developer is a company whose mission is based on launch a new construction project, in order to build and market. Among its main functions is land acquisition.
This company is the one in charge of planning and finance the initiative. Its objective is to obtain profitability through the commercialization of the properties that are obtained as a result.
What is a builder?
A construction company, as its name indicates, is the company in charge of carry out the work. That is, it is the one that carries out the construction process in a material way on the ground.
The construction of a residential property is complex and involves a certain number of professionals from different areas (architecture, foundations, masonry, plumbing, electricity, painting, etc.).
Therefore, a real estate construction company's mission is to make all this machinery work in a coordinated way. In many cases, you have to outsource.
Besides of developer and builder, we can find another important agent in the housing sector: the real estate agency. The main task of the agency is the commercialization of real estate developments.
Differences between a developer and builder
It is common in the real estate industry for a company to promote and build the same initiative and assume all phases of a project. It is also common for a promoter to have its own construction company; even your own real estate agency (or, failing that, a sales team).
In fact, there are state organizations that represent the interests of these two types of companies, such as ACPE Spain.
Thus, the distinction between the two is of a functional nature. It is based on the powers that each of these agents have in a specific real estate project.
However, since construction is a long and complex process, it is necessary for an entity with adequate experience, knowledge and material resources to intervene to carry it out. That is why there are construction companies themselves.
The promoter kicks off the project by obtaining the land, the architecture studio that designs the property or properties and obtaining all the permits and licenses. He even takes care of subcontracting the construction company in case it is not part of his group.
That is, a promoter has a more global job, while A construction company only has the mission of carrying out one phase of the project; but it is a phase with sufficient autonomy and technical difficulty to require a specialist.
Nevertheless, Once the construction phase is finished, the work is delivered to the developer so that he can continue with the process of selling and/or renting the properties..
Financing alternatives for developers and builders
Because the promoter is usually in charge of financing and needs a large amount of monetary resources to start the project, a series of specific financial instruments are available to them.
Between the financing options for developers is the Bridge Loan: a focused alternative for business purposes that provides immediate liquidity.
He Bridge Loan for Developers is a kind of temporary financing. Until you get a definitive developer loan, which is slower and more formal because it is long-term financing and for high amounts, the real estate developer resorts to this route to meet their own monetary needs to start a development project. new construction (obtaining the land, licenses, starting construction, etc.).
In addition, this financing alternative for developer companies makes it possible to offer financing to buyers and only interest on the loan is paid during the construction phase.
In Alter Finance We are specialists in negotiating and processing this kind of financial alternatives for developers and construction companies. you can put yourself in contact with our staff and we will help you to get the best way of financing for your real estate initiative.