Property development is one of the best ways to make money from properties, with many of the world’s wealthiest people making billions from it. However, there are many risks involved, which fortunately can be avoided with the right knowledge.
Consider these tips below.
Choose your land wisely
A very low margin is involved in developing one block into two; therefore, it would be wise to ensure that you find a block that can be developed into a couple of properties. Once you achieve this, the finance is classified as commercial, meaning you will require money capital upfront and meet tighter lending conditions.
A rule of thumb is to stay within your limits. Keep in mind that it’s sometimes wiser to do several smaller developments.
Location is the holy grail of real estate.
Properties in prime locations sell and lease more than secondary locations even when the market is doing poorly. Savvy developers such as Aubrey Ferrao know where to develop by identifying optimal development sites. Successful developers look at numerous metrics to identify a location and are smart enough to access off-market opportunities from built relationships with the people who matter.
You will also need to research and determine the kind of property the people in that area want. If, for instance, the area is popular with families, building homes with more bedrooms with proximity to schools could be your best bet.
Build a solid network
Successful property developers have a solid network of contractors, partners, suppliers, and other related property development professionals. By offering this group continuous work, you can get cheaper deals and other privileges.
This cuts costs and keeps the project going smoothly, hence quicker turnaround times and faster builds.
You also need to determine how much profit your project will make. Many developers go broke because they invest with their emotions without complete and comprehensive development feasibility.
You will need to an excellent feasibility study on things such as:
- Conveyance and legal costs
- Construction costs
- Purchase price/date and settlement
- Consultant’s costs
- Rates and taxes
- A contingency amount
- Rental and sales income etc
While this study will be based on several assumptions, it can be a helpful guideline.
Property developers understand that time is money, and every day counts. Hence efficiency is everything. Knowing when things need to be done and never missing anything saves lots of time and money.
As a result, successful developers such as CEO Aubrey Ferrao know the timelines that all steps should take place to avoid costly blunders.