The Complete Guide to Home Development: From Start to Finish
By Michelle Clardie on 04/15/2025.
Reviewed by Dan Gatsby.
Whether you’re building your dream home, developing a new investment property, or rebuilding after a disaster, home development can be a rewarding process. At the same time, developing a new property from the ground up is a complicated process, full of potential pitfalls to avoid.
In this Complete Guide to Home Development, the real estate experts here at Gatsby Investment will walk you through the steps of developing a home from start to finish!
How to Develop a Home in 10 Steps
This guide to home development can typically be taken step-by-step. However, some steps may overlap or run parallel as you progress toward your new build.
Step 1: Define Your Goals and Budget
Start your home development project with a clear vision of what you want to accomplish.
Will the final project be a starter home, a rental property, or a rebuild? How much are you willing and able to spend on the build? What does your ideal timeline look like, and can you absorb delays? What features are non-negotiable, and what features are on your wish list?
By determining your goals and budget, and giving serious consideration to your timeline and scope of work, you will have a clear vision to guide your decisions moving forward.
Step 2: Start Arranging Financing
Financing a home development often requires a mix of personal savings and construction loans. If you’re rebuilding after a disaster, insurance payouts and government aid may also be important sources of funding. In many cases, developers take on short-term construction loans during the build, then replace that loan with a long-term mortgage once the construction phase is complete. Most construction loans cover as much as 75-80% of the project’s cost, with the remainder typically funded from savings, insurance payouts, and/or government assistance.
If you are new to real estate development, you may need to partner with (or hire) an experienced developer to qualify for a construction loan. Lenders might not accept the risk of loaning funds to a borrower without any development experience. You might also need excellent credit and enough verifiable income to comfortably cover your existing debts plus the new loan, in addition to everyday living expenses.
When budgeting, be sure to include the loan interest, closing costs, and any required contingency reserves in your calculations.
Step 3: Choose the Right Location
If you’re rebuilding, you may already own the lot you plan to develop. But if you’re buying land for a new home or investment property, choosing the right location is crucial.
When evaluating possible locations, consider the following:
Zoning laws. Is the lot zoned for your intended use?
School districts. Even if you don’t have school-aged children, school districts influence neighborhood demand and property taxes, so they should be considered.
Access to utilities. Is there already electricity, Internet, and water easily accessible by your chosen lot? If not, how difficult would it be to arrange services?
Local amenities. How close are you to conveniences like grocery stores, gas stations, and parcel stations? How far would you have to travel for pleasurable amenities like restaurants, parks, fitness centers, and shopping?
Noise. Are you satisfied with the noise level of the area ‘round the clock? Daytime noises like heavy traffic and children playing can affect your ability to work from home or enjoy quiet days off, while nighttime noise like nightclubs and bars can impact your relaxation and sleep.
Future resale value. Is the neighborhood in demand by buyers? Is there any reason to think that demand may be dwindling?
Rental demand. Investors who plan to rent out the completed home should also consider the marketability of a rental home in the local area.
Importantly, you don’t have to limit yourself to vacant lots. In some cases, it may be beneficial to buy a lot with a neglected structure that can be demolished.
If you’re buying land to develop, it’s a good idea to get a real estate agent in your corner as early as possible. Their market knowledge and industry expertise can help you find a suitable lot and secure it under favorable terms.
Step 4: Assemble Your Team
A successful home development project relies on a coordinated team of professionals. Here is a list of the key vendors required for a seamless project:
General contractor (GC). The GC may be the single most important person you hire. They oversee the entire construction process, managing subcontractors and ensuring that the project stays on schedule and within budget. Look for someone with extensive experience in similar projects and verify their licensing, insurance, and workers' compensation coverage. Make sure your GC’s contract is clear and detailed, with an itemized breakdown of costs and policies in place for change orders that will inevitably arise. Confirm that your GC will be on-site regularly to oversee progress and handle any unforeseen issues. Learn more about hiring a general contractor.
Architect. The architect designs the home, ensuring compliance with zoning and building regulations. They also create the plans needed when applying for permits and during construction. Look for an architect with a proven track record in projects of similar scope, particularly in your local area. A good architect will help you balance aesthetically pleasing elements with functionality and cost efficiency. You and your GC should collaborate with your architect to make sure the design aligns with your vision and budget.
Structural Engineers. Structural engineers are responsible for making sure your home’s design is safe and stable. They perform load calculations and verify that your structure can withstand stressors like earthquakes or weather-related forces.
Civil Engineers. Civil engineers confirm compliance with environmental and zoning regulations. They handle environmental issues like grading and drainage.
Inspectors. Inspectors verify building code compliance at every stage of construction, from foundation to finishes. They evaluate the structure at each milestone during development to confirm that the home meets all legal requirements and safety standards before you proceed to the next step of construction.
Interior Designers. Interior designers create a functional and visually pleasing home interior by choosing materials and finishes that suit your lifestyle and preferences.
Landscape Designers. Landscape designers plan and create functional and appealing exterior spaces, including yards, gardens, driveways, and other outdoor features.
Surveyors. Surveyors confirm property boundaries, assess topography, and ensure your development plans match the physical reality of the lot.
Each member of your development team plays a unique and critical role. To avoid delays and misunderstandings, it is important that they all work together. Part of your GC’s job is to coordinate these professionals, as well as the builders and contractors (electricians, plumbers, carpenters, painters, etc.). Your CG may already have professionals they can recommend for these positions, giving you a head start in lining up talent.
Step 5: Design Your New Structure
Work with your architect, interior designer, and exterior designer to create a space that balances functionality and aesthetics, as well as timeline and budget.
As you work with professionals on your design, consider factors like:
Layout
Energy efficiency
Accessibility
Long-term needs
It’s also crucial to consider future-proofing your new home. With natural disasters like wildfires, tornados, floods, and hurricanes on the rise, it is important to consider how your new development will weather these forces. For example, if you’re building in a fire-prone area like Los Angeles, work with your CG, architect, and designers to integrate fire-resistant materials, ember-resistant vents, and defensible landscaping into the design. Not only will these measures help protect your home and investment in the property, but they are often required for permitting as well.
Futureproofing your home can also include solar power systems, backup generators, and smart home safety systems. While these may add to upfront costs, they often save money in the long term and increase the value of your property.
Step 6: Secure Permits, Approvals, and Insurance
Securing permits can be one of the most challenging parts of development, especially in areas where zoning laws, building codes, environmental restrictions, and fire safety regulations are particularly stringent. Your architect and GC should handle much of this process, applying for permits as necessary, but it’s important to stay informed as the property owner.
Inspections and revisions may be required to secure permits and approvals, so be prepared for multiple steps along the way. It’s also common for city permit offices to have backlogs of projects awaiting approval, so there can be wait times through no fault of your own or of your team.
Step 7: Prepare the Site
After such diligent planning work, it’s finally time to carry your plans into the real world and prepare the site for development.
Preparing the site generally includes:
Clearing the land
Grading and leveling
Installing foundational utilities such as water, sewer, and electric
Pouring the foundation
Site prep sets the tone for the entire build. Getting this phase right is critical for the success of your development. So don’t rush through this phase in your excitement to see the building go up. Take your time and do it right.
Step 8: Build the Structure
With the site properly prepared and the foundation poured, construction can begin on your new home development. Depending on the size and scope of your build, as well as the availability of labor and materials, the building phase may be completed in just 6-18 months.
Milestones in the building phase include:
Framing and walls
Plumbing, electrical, HVAC
Insulation and drywall
Flooring, cabinetry, fixtures
Finishing details
Regular walkthroughs of the project can help you stay informed and give you a chance to address any concerns or potential issues before they become major problems.
Check in with your GC often to keep lines of communication open and encourage accountability. You can also establish a schedule of periodic meetings with your team to review progress, address any issues, and discuss any necessary adjustments to the plan.
Step 9: Final Inspections and Walk-Through
When construction is complete, the local building authority must inspect the property and issue a Certificate of Occupancy (CoFO), a formal document that confirms the development complies with all building codes, zoning laws, and safety regulations and is approved for occupancy.
At this stage, you can walk through the property and create a final “punch list” with any items that still need to be completed before you can officially sign off on the project. When the punch list is complete, walk the property with your CG one final time to make sure all contract requirements and expectations have been met, including the receipt of warranties required of (and/or promised by) the GC.
10. Take Possession and Maintain
At this point, the property is yours to occupy or rent out.
Start tracking utility usage and costs for future budgeting purposes
Replace your construction loan with a long-term mortgage if necessary.
Leverage the Knowledge, Experience, and Connections of the Experts
Home development is a significant undertaking that requires careful planning, diligent oversight, and detail-oriented execution. The professionals that contribute to your development can set you up for success or create frustration.
When in doubt, outsource your development project to local experts with the experience and industry connections to provide a stress-free experience.
Gatsby Investment, for example, offers a Single-Family Built-for-You Development Program that allows property owners in the Los Angeles area to outsource the development of their new home or investment property to Gatsby. With our successful track record of developing dozens of local buildings, we have the systems and personnel in place to manage your construction project from start to finish!
Whether you’re a local homeowner looking to rebuild from the devastating wildfires or a real estate investor looking to grow your real estate portfolio while providing much-needed housing inventory for Angelenos, Gatsby Investment is here to help!
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