Undertaking a property development project can be hugely demanding, whether the individual planning the project is a seasoned property/land developer or a novice. A lot of organisation and planning goes into developing a project, so everyone involved must consider all factors and risks before making rash decisions. No matter the scale of the project or how reasonable it may seem, stringent planning and thought processes are paramount so that the project can be completed to a satisfactory standard and within a reasonable time frame.
Each member of your party needs to be aware of their role and others throughout the build, the intended completion date, how much budget is available and the materials or aid at their disposal. Outlining these factors before undertaking a development project is crucial so that everyone’s expectations are clear and can be worked towards, plus any adjustments can be made throughout the process. To assist with this, we’ve created this article that outlines a few factors for individuals to consider before undertaking a development project for the process to be as successful as possible.
Gauge The Scope Of The Development
First and foremost, before the project can find any footing, you must sit down with your team and gauge the scope of the proposed development. No matter if you’re planning to develop something new entirely or build off an existing development, you and your team must first identify what work needs to be carried out and how you intend to meet these objectives before the process can begin. We recommend creating a project scope plan with your colleagues that identifies your goals, describes your project, outlines the deliverables, and allocates your team members’ roles plus other expectations. Consider using internet resources to find guides on how to create a project scope statement to ensure that nothing is missed and that you and your team outline all points necessary.
Identify Risks That Could Pose A Threat To The Development
Before you undertake a property development project, it’s essential that you identify any risks that could hinder your process and cause any negative consequences to appear as a result. Identify any areas of weakness, no matter how insignificant, and discuss with your team the most likely areas of the project to go wrong and how you could prevent them from doing so. One of the most common issues that crop up for individuals embarking on a development project is obtaining planning permission and any additional surveys that local authorities may ask property developers to provide as supporting documents for their application.
Typically, property developers may be asked to conduct surveys of an ecological nature, especially if their proposal involves developing a new building, such as a habitat regulations assessment or a preliminary ecological appraisal. So that the environmental impact of the development project can be assessed and how much risk it could pose to surrounding habitats and other ecological factors. Due to the technicality of these surveys, we recommend enlisting the services of an environmental consultancy firm such as Ecology Surveys. Peruse their range of ecology surveys for more information to prevent unwanted surprises during the planning permission application and keep your development project coming in on budget and on time.
Work Out Your Finances
Once you and your team have drawn out a business plan, your next step will be working out your finances and determining a budget for your build. Whether you’re working as a part of a big team and plan to group your finances, or you’re just starting, there are plenty of options available to you when it comes to financing a property development. Some of the most common options available to property developers are as follows;
- Cash – A rarely decided upon option for property developers, especially if they’re a novice, but a valid option, nonetheless. Money is commonly used by seasoned property developers or those that have large sums of cash readily available.
- Residential Mortgages – A mortgage for property developers that intend to live in the property while the development is ongoing.
- Personal Loan – A personal loan is a good option for property developers that have inherited a property or only have a small development in mind for which they need a small sum of money.
- Bridging Loan – Property developers commonly use bridging loans to purchase property while trying to sell another because of their short-term nature. Bridging loans are also helpful for those who require money while waiting to receive money elsewhere. However, because they are secure loans, you will need to own the property or land to secure the loan against it.
- Property Development Finance – Typically only offered to property development businesses, property development finance is a type of business loan used for the purpose of funding property development.
We’ve only outlined a few of the many options available to property developers when it comes to the funding of a project. Suppose you would like to learn more about financing your property development project. In that case, you could consider talking to the individual in charge of your finances and seeking their advice, looking at internet guides that outline the several options available or asking fellow property developers.
Conduct Market Research
Providing that your proposed property development project isn’t for your own usage, you should consider conducting market research before starting any works. You’ll need to evaluate what is currently available in the location or any similar properties or developments and what potential buyers/renters in your chosen area are looking for. You can gain market research by using internet resources and befriending local estate agents or letting agencies in the area, which will help you obtain valuable information about upcoming projects, favourable locations, the planning permission application process and what kind of buying or rental prices to expect in certain areas. Conducting market research will also help you determine your target demographic, especially if your long-term goals are to rent or sell your proposed property development once the works are finished.