Lesson Learned

>>As a young developer, Market America Development's president and CEO Gregg Fous relied too heavily on other professionals and paid the price.

When he developed his first project in 1991, a residential development in Charlotte County, Fous hired an advisor who was told by a county official that the planned building would have to be redesigned to meet codes. But the advisor failed to ask for documentation of the codes. Fous later discovered that the county official was in error, but not before he had a spent around $1,000 redesigning the building's overhang.

Although it is crucial to work with experienced professionals, says Fous, "I think it is imperative that the developer has a personal involvement in preliminary hearings and courtesy reviews of applications. That way you have direct knowledge of some of the obstacles that your advisors are trying to overcome."

With no formal training available, most developers learn their business through trial and error. However, the learning process can be costly in terms of both time and money. "It is not like a regular job where someone could go to school to learn how to type or to be pharmacist or something," Fous says. "It is just something you cannot teach because it is such a fluid situation."

"You have to be ready for change, and you have to have the experience to deal with the change that is coming," says David Bartley, broker and owner of Bartley Realty Services in Naples.

When Bartley began developing properties in New Jersey in 1981, he put together inaccurate pro forma reports: They underestimated costs and overestimated sales and cash flow. The overestimations resulted from a failure to understand the amount of time it would take to build the necessary infrastructure and roadways before the building could be constructed.

"I was not experienced at the time, and I relied upon other people to guide me. That advice that I was given did not pan out, and it ended up being a lot of additional money," Bartley says.