Although most reality renovation TV shows have made property development seem easy and at times glamorous, there is a lot more to it than simply buying, renovating and selling. Like anything, there are pros and cons that must be explored to completely understand the process and the commitment required and make an informed decision as to whether this is right for you.
Getting it right can be financially and personally rewarding and can be the catalyst for many people reinvesting in the property market and turning it into their full time career.
Here are some positive points to consider.
- Not limited by age, experience or qualification.
Qualified trades and professionals are required to undertake the development and construction, however the Project Management of the development does not have this requirement. No degree or doctorate will prepare you for the exhilarating ride, although a thorough understanding of the process and the market is definitely an advantage.
- An investment with sound returns.
Property is a stable investment, providing you are in a financial position to benefit from the process. There may be times when it is necessary to hold the development longer than anticipated. This aside, because of its tangible nature, property has stood the test of time as a solid investment opportunity, and property development multiplies this advantage.
- An opportunity to unleash your creativity.
The thrill of developing a property project lies in using your creative skills, that may be otherwise stifled in your everyday job, to bring it to life. The larger scale of a property development site allows you to extend those creative skills to adapt them to create a series of apartments or houses that have a connecting concept but encompass their own unique individuality.
- Flexibility (to a certain extent).
Property development is unique in that you have the freedom to accelerate or pause the process as necessary without adversely affecting the overall outcome. The selection of professionals, trades and sub-contractors can be tailored to create a desired result. In saying that, there are still by-laws and approval requirements and timeframes that must be adhered to as well.
As with all things, there are a few obstacles you may encounter and it is wise to brace yourself for the possibility that it may not go according to plan. Here are some drawbacks of property development.
- A serious commitment of time and money.
Property development requires research and capital to get started, which can be grossly underestimated. Being financially stable when entering the world of property development will help ease the financial pressure and allow you to focus on improving the property to add to its value.
- Financial pressure.
The financial pressure to make a Property Development Project successful, on time and on budget, can be huge. If
there are delays during the construction process or if the property does not reach your desired selling price, you will have to cover the loss of income and holding costs. If this has not been anticipated, it can heavily impact your lifestyle and other prospective investment opportunities.
- Uncontrollable variables.
The Property Development process is a dynamic environment. It is not uncommon to discover unforeseen elements which were not evident at the commencement. During the dig, it may be discovered that there are submerged items, such as water pipes not previously documented, which affect the proceedings. Making changes to the construction mid-build not only affects your budget but the overall schedule of works.
Coming up against local residents who oppose your development proposal can see the project stuck in the planning phase for longer than expected. It can also cause animosity between neighbours which is not an ideal situation.
Successful property developers ensure they have the experience they need and the backing of investors they may need to cover the required development costs. They collaborate with their team to ensure that the creative outcomes are the highest level of excellence possible and harness the advantages of a flexible project timeline. Simultaneously, they carefully forecast the requirements of time and money and have back up plans which can be activated if needed to accommodate unexpected delays or a softer than anticipated selling market. Drawing on their experience, and the experience of their team, they predict as many eventualities as possible and have strategies to address them if necessary. Savvy Property Developers also ensure that all the council approval processes are adhered to and create developments which will enhance, rather than detract from, the surrounding area to minimise opposition.
Property Development, for all its reality TV show credit, is a serious commitment. One that can have major repercussions on your finances now and into the future. Approach with care and arm yourself with knowledge, but enjoy the ride.
DISCLAIMER – Alleura recommends each individual seek the services of a qualified service provider before undertaking any financial investment. The information provided here is for general information purposes only. It is not intended as financial or investment advice.