Going into your first property development can be exciting, nerve-wracking and a huge opportunity!
The below checklist covers all the essential things you need to think about before you start planning - and the most common pitfalls.
For advice and support with financing your first property development, call the Revolution Brokers team on 0330 304 3040 or email us at firstname.lastname@example.org.
Know Your Numbers
Figures and data are critical at the planning stage.
You need to be sure that you will make a profit, and be able to demonstrate those calculations clearly to a lender.
- Don't start a bidding war for a development property at auction.
- Don't pay higher than you have budgeted for, for a property or site.
- Don't make an offer that you might withdraw; this can affect your reputation.
Choose the Right People
As a new developer, the advice you receive will be vital. That includes:
- Development finance brokers
- Estate agents
Ask for recommendations, or speak to past clients before you pick your team. You need to know that the people around you are reliable, experienced and trustworthy.
If you're planning to develop and sell a property, you have to be confident that there is the demand for the type of building you plan to construct.
A development that can't be sold can be disastrous, and you'll need to think about the market in the surrounding area, projected changes in the market by the time the build is complete, and what sort of buyer will be interested in purchasing your finished property.
Other Developments Nearby
Should there be other developments ongoing in the area, this can have a significant impact on your exit strategy, and the likelihood that you'll be able to sell your property quickly.
Check for other schemes, construction sites or pending planning applications to make sure you know what competition is out there.
Know Your Site
A common stumbling block for new developers is not to have given enough consideration to critical aspects of their build site - including drains and utility services.
For example, a plot with drains running through the area where foundations will need to be built is going to cost much more, since you'll need to invest in repositioning pipes.
Services are another crucial factor; you need to know what pipes and cables are underground on your site, how to connect to them, and whether any service lines will impact your ability to build to your plan.