Hoping to see a sizeable return on your property investment as soon as possible? Good on you. Be aware, though, that no developer became an expert overnight and that any development endeavour takes a bit of patience and a lot of intensive care. You’ll need to know a thing or two about the real estate world before you begin.
Consider this your first lesson.
If you’re looking to turn a profit, make sure you avoid the following rookie mistakes…
1. Neglecting due diligence regarding your site purchase.
No piece of property exists in a vacuum. Odds are, your site purchase will come with certain regulations attached—regulations for which you (and you alone) will be responsible. Do your due diligence. Research any and all environmental and/or legal anomalies that may affect your property or require your financial compliance. Know your property and all its implicit risks and restrictions from top to bottom. Should you need help, you can enlist in the aid of a professional to review your due diligence checklist. You can also enroll in a property development course to hone your real estate skills and improve your ability to spot potential building problems.
2. Forgetting your feasibility check(s).
Many burgeoning developers make the unfortunate error of simultaneously overestimating their profits while underestimating incidental costs. An easy way to combat this mistake is to run a feasibility check on a proposed development. This check should provide a thorough review of any possible payments or fees that may arise during construction and should effectively ensure that you, the developer, will never be caught by financial surprise. No project should break ground before a feasibility assessment is made.
3. Opting for quantity instead of quality.
While pricing is important, it’s neither the be all nor the end all of property development. When choosing the people who will help you complete your project, your primary focus should be whether or not they can do the job and do it well. Pay close attention to reputation and give a little less weight to hourly fees. In addition, bear in mind this rule should apply to all members of your development team, from your builder to your solicitor, financial consultant, chief architect, planning expert…and the list goes on. Budgeting is key, but reliability is essential.
4. Abandoning your legal requirements.
When embarking on a development, there will be a lot of paper to sift through. Still, though you may be frustrated by all the red tape, you should keep in mind the consequences of failing to submit the appropriate legal forms will far exceed the strenuousness of filling them out. Be sure to stay on top of any legal agreements that will affect the construction, maintenance or overall legitimacy of your development project. Types of agreements you may be faced with include: joint venture agreements, option agreements, tenancy agreements and building contracts.
5. Ignoring your people skills.
As with so many business interactions, the success of a development project can often come down to interpersonal relationships. Call on your communication skills. Talk to the people who will be living and working near your development and make a concerted effort to understand their needs and desires. Try to get a sense of the general response to your proposal and do your best to incorporate these feelings into your plans. Remember: city councillors ultimately answer to their constituents. A single false move with a next-door neighbour can easily translate to a “no” vote during the approval process.
Did these tips teach you something new? Wonderful. But why not keep your education going? As mentioned above, you may want to make a development training course your next stop.
Whatever path you choose, always remember that a little preparation never hurt anyone. If you approach a development project armed with the applicable information, your community—and your wallet—will thank you.
Best of luck in your development career.