What is the Difference Between a Property Developer and a Building Contractor?
So what is the difference between a property developer and a building contractor? Well, a property developer is a person or company who takes a piece of real estate, a piece of land, and builds some structure on it for the purpose of reselling or renting. For example, a developer might be like Lenar Builders. They own real estate, they buy property, they subdivide it, they build houses, they finish a neighborhood, and they resell these homes. A property developer could be a commercial developer where they buy a building and they rehab it, add to it, put on new features, and then they resell or release it. A developer is more of a financial structure of business development.

What Does a Building Contractor Do?
A building contractor is a company that actually does the actual work. Think about carpenters, think about plumbers, think about framers. A general contractor is the company that does the whole job. If you build a house, you hire a general contractor, a GC, and they put together the house. Now they need blueprints, they need plans, they need permits, they need all the things to go into it, but they’re not the developer. Some developers are also general contractors, but for the most part, they’re two different entities.

How a General Contractor Works with a Developer
The general contractor usually works for a developer to build a house to the specs of that developer’s plans. They also usually put in a bid to the developer that says, “Look, here’s the plans, here’s the timeline, here’s the fit and finish and all the fixtures, here’s our bid for building this property, this house, this commercial development,” and the developer will approve the bid. Now the general contractor goes to work. The general contractor probably hires subcontractors like the plumbers, the electricians, the framers, the paving contractors, and they’ll put together that structure for the developer.

Developer’s Profit and General Contractor’s Role
When it’s done, they get paid, and then the developer takes all their costs involved – the cost of the land, the cost of construction, the cost of their holding fees, and any other taxes – and then they resell it for a profit. The general contractor gets paid for their project, and the developer gets paid for profit on top of the cost of putting together that property. So again, some general contractors are also developers. They may build a spec house or on speculation. Some property developers are also licensed as general contractors so they can do some of these things, but for the most part, they’re not the one who actually puts together all the timeline of the construction process, the project management that a GC would do.