There are two good reasons to go into the property development industry; you have a passion for property, and profitability. As with anything worth doing, property development is not easy, especially for first timers. But done right, property development is still profitable.
Once you are familiar with the process, you are better able to plan and anticipate potential pitfalls, leaving you to concentrate on maximising your profit.
Plan to Succeed
Even ahead of getting finance, you can take many essential steps to ensure that your property development project goes smoothly and is profitable. These steps involve extensive research and planning so that you know what you are in for. When a property development project runs smoothly, your profit margin increases and your stress levels decrease.
- What kind of property do you want to develop?
- Where you want to develop the property?
- How is the site zoned?
- Who will you work with?
- What will you do with the property once the project is finished?
- Will you make enough money to make the project viable?
Research The Local Economy and Property Market
Profitability has a lot to do with being in the right place at the right time; not to say that successful property developers are lucky, but rather that they know the market. One cannot assume that because the site looks good and is zoned appropriately the local population and businesses will see its value. If the local economy is depressed, your plan needs to be adjusted appropriately.
You may choose to build properties which are more cost-effective, or you may choose to build more high-end properties depending on the needs of the local businesses and residents. If the area has become popular, it has always held steady interest and property prices, or if the area has fallen out of favour with locals, these are all factors that play a part in whether your project will be profitable.
How Will You Manage the project?
The profitability of a property development project is also significantly impacted by how well the project is managed. It’s an oversimplification to say that finishing the project on time and within the budget is all you need do. Of course, if you blow the budget and the timeline, you will negatively impact the project’s profitability, but how do you do that?
First of all, what is your budget, and how long will the project run? If your budget is too small or big, and your timelines are not realistic, you’ve left money on the table already.
Steps to managing a profitable project:
- You can work your budget out with a clear and thorough feasibility study which details all your costs and projected timeline. Archistar offers software with feasibility automation
- Ensure that the project is managed closely. If one contractor or employee doesn’t fulfil their obligation on time, your entire project timeline is thrown off.
- Plan and keep track of your workflow with project management software.
Property development is still profitable when managed correctly. If you need a helping hand, Archistar property development software will help you get your project off the ground with its generative design capabilities, zoning database, and feasibility calculators.