Property development can be a rewarding and lucrative endeavour, however it is imperative that you have a deep understanding of the industry. There are a plethora of perks to becoming a professional in property development. These individuals have the ability to receive better rental returns, greater tax benefits, and easier finance. Of course, property development is also a great way to save and make significant money. More than the average investor, developers are capable of creating a great property portfolio.
So what exactly is property development?
The business involves processes such as purchasing land and building and developing buildings. These developments are often an answer to what the people in a particular area need. Depending on the society and location property development can be anything from office buildings, condos, or roads. Many investors work with small or average-sized residential projects.
What does it take to enter the property development industry?
Patience, drive, and a willingness to learn are all vital for anyone interested in property development. There are tons of expertise that you will not have at the beginning and if you do not spend serious time educating yourself, then you will not be successful.
Take the time to research economics, finance, town planning, the markets, and how the construction processes work. Everyone makes mistakes, however, it is not wise to begin down this path without a clear understanding of the basics just mentioned.
What are the major things to consider before investing?
Ask yourself: Am I able to afford this development and will it actually make a significant profit?
Obviously you must know just how much you will be able to borrow and if all of the costs that are associated with developing are manageable.
Finance pre-approval is helpful as it provides you with what your limits are. Do not mistake financing the development of a property with simply obtaining finance for an investment, it is much more than that. Since most development projects involve the construction of multiple dwellings banks consider the work to be a commercial undertaking, which makes funding a bit more complicated.
Note that often fees such as purchase costs, council and architects fees, or any other consultant fees are usually considered “soft” and won’t be considered in the money that is lent. In summation, you won’t receive as big of a loan when developing as when you buy and hold investment properties.
Before making any major decisions remember that it is incredibly costly and in order to be successful you’ll need a number of people with varied expertise and experience. The concept you create will have to be feasible and no detail should be overlooked.