Property development is one of the most thriving industries in the country, with the U.S. real estate market size standing at an eye-watering $153 billion. If that’s not reason enough to entice you, the average annual base income for property developers in the US is a tremendous $85,845.
There are so many reasons to get into property development, like the possibility of making tons of money, but you need both ambition and patience. You should also be prepared to learn because even if you go through schooling, your first project will teach so much more.
Now to prepare you for all this, we have compiled all the information you need to know on how to start project management. Our guide will take you through all the steps and help you develop the best strategy on how to go about this.
What Is Property Development?
Property development is an umbrella term for a wide range of processes and activities. It involves purchasing land and developing or building facilities.
This is a continual configuration of building the environment to meet society’s needs. It is so broad that it covers everything from developing high-rise office buildings to building residential properties.
Some of the most important things you need to become a property developer are knowledge and expertise. You will have to educate yourself on the markets. Learn about the economics, the property, the construction process, and the marketing process. Most of the lessons are those you’ll learn along the way.
Understand that you’re likely to make a lot of mistakes during the first few projects. Essentially, this means that you should not give up at the beginning of your career for making mistakes you were not prepared for.
Talking to the Right People
Now that you’re ready to become a property developer, you need to discover your options and decide which aspect you would like to delve into. Talk to everyone, from real estate agents to finance strategists, accountant, town planners, architects, building contractors, development managers, engineers, and construction managers.
Go a step further and talk to quantity surveyors, marketing specialists, and property strategists. They will help you out with property development research and negotiations for properties.
Building a Team and Partnerships
As a property developer, understand that you will never work alone. You need your team of advisors and partners to see projects through to completion.
You need to have lawyers, consultants, and conveyancers that will ensure you comply with all regulations. You also need accountants and financial advisors. They’ll help you structure projects correctly to minimize taxes and maximize profits.
Building partnerships with real estate agents is essential because they will help you source for the right sites. Town planners will ensure you get all approvals and permits in the area of development.
Beyond that, you also need to broaden your network. Talk to experienced property developers, mentors, and industry experts. They will give you insights and advice about succeeding in the industry.
The Costs and Profitability of Project Development
As a property developer, you must factor in the property development cost and profitability before you start investing. You need to consider whether you can afford to undertake a development project.
Even more vital is to determine whether it will be worth your while. Establish how much money you can borrow and whether it will be enough to handle the kinds of projects you want to undertake.
It’s also incredibly important for you to have a finance pre-approval before you can start with any property development project. With this information, you will understand what your limits are and what you stand to gain in the end. When approaching lenders for financing, understand that they will have their own safety concerns.
A development project consisting of four to five dwellers will be considered commercial. Hence be more complicated to fund.
Most of the time, you’ll find that lenders are willing to finance only the hard costs. You’ll need to finance the soft costs like architecture and other consultation processes.
Create a Concept and Determine Feasibility
You’ll discover that different councils have different guidelines in their municipality. It’s essential for you to understand these guidelines and the principles of town planning.
Understand how each of them interprets the development code of the state you are developing in. In a nutshell, this means you need to do deep research before you purchase land.
It’s imperative for you to talk to all involved parties, including the town planner and a proficient architect. This will help determine what kind of property you can develop on a particular site. Never assume that you can develop similar properties to what to find in a municipality.
Those properties may have been approved under old town planning guidelines and regulations. One of the most critical aspects of property development success is securing the right property.
Site selection is highly critical to any project. Understand that it’s all about understanding the market and the current economic state.
You need to think about where the markets will be headed in the next few years of the project. Conduct a feasibility study to determine how much profit the project is likely to make. Not all property development projects will be financially feasible.
One of the most common reasons why most property developers go broke is because they purchase properties out of emotions. They fall in love with development sites and go with their gut. They fail to conduct comprehensive developmental feasibility studies, which leads to losses.
Getting Started With Property Development
Property development is an amazing career path, but only if you get it right. Follow these steps and do thorough research into all aspects before you get started. If you need more insightful information about real estate, please check out our blog section.
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