Nowadays, the prospect for massive earnings in the property development business appeals to both developers and investors. Many mistakes can turn your opportunities into miseries that you need to avoid if truly you want to succeed in this industry.
If you can avoid the common errors that people make in property development, you will be able to maximize earnings and reduce the associated risks involved. This article will inform you of my top tips to help you with your property development projects.
Below are tips to help you achieve your property development goals.
Understand Property Development Before You Launch
It is very common to see people who are just starting in the property development business do few research types, make a rough estimate of the costs and embark on a project. The fact is that you need to have a thorough understanding of how property development works if you wish to be successful in the industry.
Perhaps you are planning on supervising the development of a project yourself; you will need to understand and work with many other professionals in the industry such as architects, town planners, surveyors, technicians, lawyers, building firms, building inspectors, local councils and many more.
Suppose you do not have the required experience to navigate the property development landscape successfully. In that case, it will be a good idea to seek others\’ assistance instead of supervising it yourself, or you hire a planning and development manager. You may also consider taking part in a joint venture or investing in a reputable property development firm.
Understand Property Development Market
Having a thorough understanding of the market\’s state is essential if you want to be successful in the property development business. You need to do thorough research as well as talking to players and stakeholders in the industry to be able to answer questions such as;
- What category of person resides in the selected area?
- What level of the property cycle is the selected area in?
- What is the price buyers will pay in that area?
- Will the development be in great demand in the area?
- Which can determine if you are going to be successful or not?
Spend Time Researching The Site
Perhaps the most important part of property development is locating a suitable site. After getting a suitable site, the next step is finding out about zoning regulations and subdivision rules. Is the site heritage listed? What local area planning policies or proposed rezoning affect the site?
Complete A Feasibility Study
After you are done researching the site, the next step is to conduct a feasibility study that will evaluate how much the site worth, the number and type of houses you can erect on the site, and whether you will make huge gains. If you fail to do a thorough job at the feasibility study, you are running the risk of losing your investment or lowering your profit margin.
Your feasibility study should include an analysis of the whole-time frame of the project; an estimation of project and subdivision fees; location of services and utilities; soil examination, soil type and drainage requirements; restrictive covenants or easements on the land title.
How Much You Will Pay For Tax
How much you will pay as the tax will depend on whether you are an investor or a developer. For instance, investors will pay tax on any profit made from any property, but if they decide to hold onto the property for more than 12 months, they may be entitled to a fifty per cent reduction. Contrarily, developers may not qualify for a tax reduction and may have other tax responsibilities.
You need to know your tax status before starting a development process by seeking a professional tax accountant\’s help. It is also crucial to decide the right structure to acquire your property, such as a company, in an individual name, in a trust or as a joint venture. Each of the structures has its own legal and monetary implications.
