3 Property Development Mistakes You Need To Avoid
17 Jan 2019
Property development can be a very rewarding experience, both emotionally and financially. As the Perth property market begins to transition out of its slow down and enter the recovery phase, now is an excellent time to be developing property that will allow you to make the most of the impending economic upturn that many experts are predicting.
As a one-stop-shop for Perth property developers, our team of skilled professionals can help guide you through the entire process from sourcing the land to construction to sales & marketing.
Having been around the property development block more than a few times, were also very aware of common mistakes that people make. There are numerous factors that can be the difference between success and disaster - property development is never a risk free exercise after all.
If you’re considering embarking on a property development project in the near future then make sure you check out the following list of property development mistakes to avoid.
1. Skipping Your Due Diligence
If your development project is going to be a success, you have to do your homework. You have to be 100% sure that a site is suitable for development, as failing to notice a problem in the early stages of acquisition could end up costing you dearly in the long run. It can even hinder the feasibility of the entire project.
A proper due diligence process will look beyond the surface of the property to uncover any hidden problems. This can include both the site itself as well as the council rules and regulations that govern it. For example, you really don’t want to have a certain development all planned out only to discover that the R codes for your land don’t allow for it.
If you lack expertise in this area then engage someone with the necessary experience. Spending a bit of money up front can potentially save you much, much more further down the line.
2. Choosing The Wrong Location
Your project could be doomed from the start if you haven’t chosen the right location for the specific type of development you want to build.
Do your research and decide whether there is enough demand in that area for the type of development you’re planning. If there is already an oversupply, then that will push your price down and limit the profitability of your project. Even worse, you could be left with a vacant property that isn’t attracting any attention from buyers.
3. Bad Financial Planning
The purpose of a property development project is to turn a profit. One of the biggest mistakes made by amateur investors is overcapitalising on cost. The last thing you want is to embark on a project that won’t deliver a return. Even worse, you don’t want to be stuck in a situation where you’ve blown your budget before the development is even finished.
Make a solid financial plan that factors in costs relating to approvals, building expenses and taxes. It’s also highly advisable to include a financial buffer to cover any unexpected costs that occur.
If you do the maths and you’re not left with a significant profit margin at the end of the day you’ll need to reconsider your development strategy or find a different site that better suits your budget.
Ensure Your Property Development Success With Sovereign
At Sovereign, our team of dedicated development professionals has decades of experience under their belts. This means that we’re able to provide rare clarity and valuable advice that can help you avoid these mistakes and ensure the success of your next property development project. Click here to learn more, or get in touch with us for a chat today.
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