Property developers are easily positioned to make generous profits. Property development is the process whereby developers take their time to study properties, then invest in land or property, and build on the land or alter the property. The finished product is a development that is useful to the community and profitable for the developer.
For a property development project to be profitable, the developer needs to plan the project exceptionally well by minimising unnecessary costs, completing the project on time, and successfully selling or renting the finished property. The process is intricate, time-consuming, and costly, but the potential for reward outweighs the risk.
Take It Slow
It’s tempting to run to the bank for funding at the sight of the first property which captures your imagination.
Always ask why is this site for sale, and why is the price what it is? Keep the bottom line in your thoughts throughout the property development process. Before heading to the bank, research the piece of land thoroughly. Understand how it is zoned, what the planning regulations are and then decide whether it’s worth your consideration.
Make Friends and Influence People
Once you’ve narrowed down your choice of sites, you need to conduct due diligence. With the information you have so far, you need to consult with professionals; speak to people with skill sets outside of your field. Architects, lawyers, accountants, real estate agents, and builders will help you get the ball rolling. These professionals can give you cost estimates and advice for your next steps. These cost estimates will help you in conducting your feasibility study.
Punch the Numbers
With a site in mind and an idea of your costs, your next and most crucial step is to conduct a feasibility study.
Where large sums of money are concerned, flying by the seat of your pants is not an option. A feasibility study accounts for all your costs–both expected and unexpected–so that you can decide whether the property development project is feasible or not. The feasibility of a project is based on your projected profit margin. If your profit margin is too low, you will either adjust your strategy or forgo this project.
Run a Tight Ship
With your team, suppliers and finances all worked out, you can get your property development project underway. A development project, however, does not merely run itself.
Whether you are managing the project or hiring a project manager to help you, the process must be managed efficiently to maximise profits. When mistakes happen, builds run over time, budgets are blown, and your profit margin dwindles. Make sure you are always talking to someone, chasing something, and problem-solving so that you can avoid disasters and mitigate your risk.
If all goes well, you can sell or rent your properties as planned. The only trouble here is that as mentioned above, you must move quickly. Time spent with your property empty is money wasted, so you need to transition to sales mode with ease and haste.
Of course, there are an infinite number of aspects of property development that will affect your project’s profitability. But with thorough investigation, preparation, and a speedy exit, you can mitigate your risks and maximise your profit. With Archistar property development software, you can find and research sites, get designing, and conduct your due diligence and feasibility studies in a fraction of the time, all on one platform.