Investing in real estate development is an excellent way of building wealth through monthly rental income, lease, or property sales. According to Yahoo Finance, the global real estate market value will reach over $3.7 billion in 2022 from $3.3 billion in 2021. Unlike most investment options, developing real estate properties can be very lucrative. Whether you wish to develop residential or commercial properties, these assets have the potential to generate a high return on investment. However, to be a successful property developer, you must be ready to handle various processes. From acquiring land or property to designing, construction, and calculating service tax and VAT on under-construction buildings, there are many steps involved in property development. Keep reading to learn the 3 critical property development steps every developer needs to master.
Pre-Development
One of the common mistakes new property developers make is overlooking the vital elements of the pre-development phase. As a developer, you should assess the logistics of your project before anything. This entails performing an economic feasibility study, finding a suitable location, budgeting, buying land, and obtaining zoning permits.
Failure to weigh these aspects thoroughly often leads to project issues like financial miscalculations, legal complications, and unfinished buildings. For example, if you don’t design and budget carefully from the start, you’ll likely face financial problems throughout the project. Likewise, violating zoning laws results in hefty fines or lawsuits. So, before you can think of constructing housing units or commercial properties, find out if your construction site is designed for your desired structure. Doing so helps you avoid legal problems with local authorities.
Construction Phase
This phase is where developers are under pressure to oversee everything with little to zero mistakes because correcting errors made during construction can be difficult. With this in mind, make sure you have a well designed project plan before committing to construction. Remember, even the slightest miscalculation could force you to review your budget, extend your project deadline, or abandon your project. To succeed in construction, you must understand the entire process. First, you’ll need to prepare your site to give way for the installation of underground utilities.
Site preparation entails removing trees, bushes, tree stumps, and other obstacles that may stop you from achieving your goal. Therefore, you’ll need to find land clearing and brush removal experts to enhance efficiency and safety at the site. These professionals have the skills and equipment needed to clear your land, paving the way for grading and paving. Other aspects of construction include signing contracts with experienced and reliable contractors and quality control. Your ultimate goal is to identify pitfalls and fix them early on to avoid significant development complications. So, prioritize quality control by hiring an experienced project manager.
Post-Development
Once you’ve completed the construction phase successfully, determine what you’ll do next. Ask yourself whether you’ll be renting out space, leasing the property, or selling it. In most cases developers choose to hold on to their properties as long-term investments. That’s because developed real estate properties provide high returns through monthly rent. You also get to tap into your home equity while enjoying high capital growth.
Investing in real estate property development is a sure way of accumulating wealth. However, the process can be stressful, especially for new developers. To accomplish your goals, make sure you understand the aspects of pre-development, know what construction entails, hire the right contractors, and weigh your post-development options carefully.