In these changing times, when property investors can no longer count on double digit price growth , many are considering getting started in property development to help them ‘manufacture’ some capital growth.
While property development can be very lucrative, many beginning property developers get themselves into trouble because they don’t know what they don’t know. They step into a potential minefield without doing sufficient homework.
At the other extreme, many would-be property developers don’t even get started because they don’t know where to start. If you want to get involved in the development of new townhouses or apartments, then a great place to start is understanding the process.
So let’s break down the process of real estate development, because it’s much more than the construction of a number of dwellings on the one parcel of land.
Property developers follow a sequence of steps from the moment they first conceive a project to the time they complete the physical construction and begin ongoing asset management. While the sequence may vary slightly, usually the development is broken up into the following elements:
- coming up with the idea
- refining it
- testing its feasibility
- negotiating contracts
- making a formal commitment
- constructing the project
- completing the project and finally
- managing the new project