7 key factors to analyze the developer before investing in real estate
When analyzing a real estate investment, attention usually goes first to the IRR, the timeline, or the asset type. However, in practice, one of the factors that most strongly influences the final outcome is often overlooked: the developer. Beyond the numbers, real estate investing means entrusting capital to a team that must execute a project over months or even years. That is why understanding who is behind the project is just as important—if not more—than the expected return.
The developer is not merely a project provider; in many ways, they are your partner. They make critical decisions in moments of uncertainty, manage unforeseen issues, and adjust the course when conditions change. If the developer fails, a strong IRR on paper is of little use.
Focusing solely on expected returns often leads investors to underestimate operational risks: construction delays, cost overruns, commercialization issues, or financing challenges. It is also important not to confuse roles. The developer, the construction company, and the sales agent are not always the same entity. Understanding who does what helps identify where the real risks of the project lie.
Key factor 1: Track record and specialization
A developer’s experience must be measurable and relevant. It is not enough to have completed “many projects.” What matters is how many, of what size, in which locations, and—most importantly—with what results. A solid track record includes completed projects, capital managed, and a history consistent with the type of operation being proposed.
It is also essential that the developer has specific experience in the asset type they intend to develop. Residential developments, rental assets, and complex refurbishments each require different expertise. Warning signs often appear when the track record is unclear, very recent, or lacks coherence.
Key factor 2: Financial strength and leverage
A solid developer brings not only experience but also their own capital. Investing personal funds in the project—often referred to as skin in the game—aligns interests and reduces the likelihood of excessively risky decisions.
Analyzing the developer’s existing debt levels and reliance on external financing helps assess how resilient the project is under pressure. Metrics such as LTV (loan-to-value) or LTC (loan-to-cost) indicate how much financial risk the project assumes and how much buffer exists if costs or timelines deviate.
Key factor 3: Alignment of interests with investors
Beyond solvency, it is crucial to understand how risks and returns are shared. A developer who earns only a fixed fee has very different incentives from one whose compensation depends on the project’s final performance.
Investors should understand how much capital the developer commits, how their remuneration is structured, and what happens if the project performs better or worse than expected. Good alignment does not guarantee success, but it does reduce the risk of decisions that benefit the developer at the investor’s expense.
Key factor 4: Quality of the business plan and assumptions
A professional developer presents a business plan based on realistic—not overly optimistic—assumptions. Sales forecasts, costs, and timelines should be supported by market data and prior experience.
Equally important is the analysis of stress scenarios: what happens if construction is delayed, costs increase, or sales take longer than expected? Identifying critical dependencies—licenses, pre-sales, bank financing—helps clarify which elements could jeopardize the schedule or profitability.
Key factor 5: Team and project governance
Behind every developer is a team. Knowing who is responsible for construction, sales, and finance helps assess the project’s execution capacity. Clear roles and proven experience reduce internal friction and coordination errors.
Observing how the same team has performed in previous projects provides valuable insight into their working style, their ability to handle unexpected challenges, and their operational discipline.
Key factor 6: Reputation and transparency
Today, a basic online search can reveal a great deal: press coverage, previous projects, corporate changes, or known disputes. Not every issue is negative; what truly matters is how those situations were handled.
Transparency is reflected in the quality of reporting, the availability of documentation, and communication with investors and lenders. A developer who communicates clearly—even when there are delays or adjustments—tends to inspire more trust than one who only shares good news.
Key factor 7: Relationship with banks and alternative lenders
A developer’s relationship with banks and other financing partners says a lot about their credibility. It is also relevant whether the developer repeatedly works with the same investment platform. Recurring collaborations are often a sign of mutual trust and reasonably satisfactory past experiences, both in execution and communication.
How Urbanitae analyzes developers before publishing a project
Because of the critical role developers play in the final outcome of a real estate investment, platforms such as Urbanitae carry out a prior due diligence process to assess a developer’s reliability before publishing any project. This analysis includes reviewing the developer’s track record, financial position, team experience, historical project performance, and behavior in previous operations, as well as the alignment between the specific project and the developer’s real area of expertise.
In addition, the structure of the transaction is assessed, including the level of equity contributed by the developer and the coherence of the business plan with the market in which the project is located. While this screening process does not eliminate the inherent risks of real estate investing, it does help filter out developers or projects that fail to meet minimum standards of solvency, alignment, and professionalism—creating a stronger foundation of trust for investors from the outset.
