Pick any urban area you can think of and imagine all those houses, buildings, sports centers and shops.
Someone must have planned, constructed and built them. That is exactly what property development does. It means buying, constructing, reconstructing and eventually selling a piece of property.
A Growing Business
Since there is a steady demand for new construction projects, people have begun wondering how to start this type of business and what it involves. Not many people begin with great amounts of money or a perfectly clear idea about which property is the most suitable to start with.
The good news is that real estate background is completely optional. This means you can start from scratch, but you’ll still need a sound business plan. It will allow you to ask yourself the right questions while the answers will contribute to the clarity of the strategy that is later to follow.
While you should start with thorough market research, the strategy also requires funding, development and construction strategies to approach the plan from all sides and evaluate the feasibility of the project.
This is why finding the right team of people to assist you on your way to success is of pivotal importance.
Fundamentals Of Property Development
Still, what it all comes down to are the fundamentals of this business. Those include:
● Acquisition
Acquiring a property is possible even without any money. While some investors simply purchase the property, others may opt for joint ventures which allow a unity of individual investors. Each of them participates in the project with their respective resources.
You don’t have to look far to see the top Australian property developers who deliver residences based on these joint venture agreements. The level of participation is rather flexible, and it involves either passive high-return investments or active partnerships.
On the other hand, another viable solution might be the “development agreement”. This implies the landowner giving you the land in exchange for whatever the contractors agree to.
● Feasibility
This brings us back to the business plan. At the start of any business, you want to aim at reducing the risks and staying within the limits of legal requirements. It is at this stage that the due diligence plan has to be performed.
It involves evaluating the risk of flooding, ground stability, demographics and other factors which will prevail over whether or not that piece of property is really worth the money.
● Legal actions
Acquisition and feasibility mean nothing unless your project gains approval of the authorities. Payment claims and schedules along with other residential building legislations have to be kept in mind because the procedures have to be law-abiding.
● Finances
Someone has to buy or lease the project, otherwise it will not generate any revenue. It all depends on whether the objectives are short-term or long-term. The finances have to be planned ahead, often for the 12-month period.
● Realization
Realization is the final form of the project that is ready to be placed on the market.
Refurbishing
Although it might sound like property development is only about building a property and then selling it, there are plenty of other options to choose from.
Not only does this business allow you to build new objects but it also enables you to reconstruct the existing properties or refurbish them.
It comes as no surprise that renovating a property is a challenge in its own right. These types of projects are usually short-term but the factors to be taken into consideration do not differ greatly from the long-term ones.
Social demographics and resale values are only some of the aspects worth considering. Property refurbishment does not involve changes to the structure of the property. On the contrary, it involves beautifying alterations of the existing setting.
Presentation and the preservation of the property are the final stages of any property development project. Once again, this is the perfect moment to think about a quality marketing strategy.
Targeting the right potential tenants or buyers along with keeping them satisfied will ensure a good reputation for building your portfolio. Once everything fits into place, you can rest assured you are on the right path toward obtaining a career of a reputable property developer.