Property Development In 7 Steps
Do you have a large property that you are sure could be upgraded for great wealth but have no idea how to develop it? Are you close to retiring and want to move into a smaller property but get the most value out of your existing property? Property Developing could be the answer you are looking for…
As with all projects taken on in life there is a system for everything. Property developing is just the same. There are seven key steps for property development:
The critical steps are:
Find a site (if you are not sitting on one right now)
Finding a site is quite easy just look in the real estate section of the newspaper. Look on real estate websites. You are looking for a property that can be divided up or could have more built than what currently is on the property now; or value added.
If you already own a piece of land that you have a feeling could be developed to create much more value for yourself; finding a site is not required.
Site analysis and feasibility is the step that can be critical for a project. It basically requires researching a site to see if it is profitable. Property developing can hold hidden costs. To find out what cost are required it pays to call professionals to find out costs. Call your local council for all required costs required to have all utilities connected/upgraded for your project. Architects are excellent source for determining costs like council approval costs including drawing required. Construction cost can be very important as many projects where new buildings will be built the construction costs are a large part of a project. The last important piece of information is sale price because if you can not sell your product for enough (or it sits on the market for a long time) the project will not be infeasible.
Planning permission this can sometimes be done for you already if you property and it is advertised that it has approval you will not require this. If you own a property that does not have this on it, you will need professional help. Architects can be invaluable here or someone who is a property developer themselves or a property developing company offering Project management can help. Using a professional can take the pain and stress away from you making it a much better experience.
Finance is one of the most fun topics to deal with. As we all know talking to banks can be difficult to get finance for homes. And the same if not more difficult for projects and a good financial package is required as all banks will have requirements including profit margin. Banks will not lend on a project with a lower than 20% profit margin.
Construction can be one of the most exciting and scary steps. Obviously most people won’t do the building themselves it will be done by a builder. Construction is quite simple when you have a building approval you allow the builder on to start building. When paying for building as it continues through the project the builder will require funds for work completed. Paying the builder can become a bit tricky because obviously if you end up paying for construction before it is complete then the project might go undone. Have a contract in place, the contract will list all required steps and funds can be distributed to the builder in stages of development. You may pay a professional to monitor these steps to keep the builder honest at all times.
If you are concerned about a large project hire a quantity surveyor to follow the project. They will report on what has been completed and what should be paid for. Quantity Surveyors are professionals at this and take the risk out of construction. One other advantage is if you have a quantity surveyor you can also get them to create a depreciation schedule to help sales.
Sales is an interesting topic. We all know that you can use a real estate agent to sell products. This can be very helpful as these people are professionals in the property selling business. Another option is going to a promoter (or Marketer) who will actually sell the product for you to a list of customers they have (database of clients looking for investments). This can cost more but if you need pre-sales they can be extremely helpful in getting fast sales.
If you have a property and would like to get developed it into something much more or know of someone who is in need. However, if you are still unsure as to the first person to contact to get started.