Developing property for residential use is a lucrative and money-making enterprise for real estate entrepreneurs with the resources to develop high-quality residential complexes for middle- and high-income home buyers. It brings long-term gains and also helps create a stable investment portfolio for the developer.
The flip side of real estate investment is the high amount of capital required to build a new property, low level of liquidity when the market is slow and, if the money is borrowed, high interest rates that only seem to increase with time. In spite of that, real estate development is a flourishing industry attracting new investors and stakeholders by the day.
That said, any new property development is wrought with challenges, and builders and developers need to take all every possible precaution to avoid bottlenecks and unnecessary delays. If you’re planning to develop a new residential building or complex, here are four tips to help you make informed decisions as you go along.
Selecting the right site for your project is the most important aspect of property development. A tremendous amount of research goes into finding land that fits the requirements of your specific project, and even when you find a good site, a great deal of assessment needs to be undertaken to ensure the place is environmentally and economically viable for the intended project.
From carrying out environmental risk assessments to securing the necessary permissions, the land selection and buying stage itself requires a great deal of time and effort from the investor.
To find the best sites suited for your project, it is important to refine your land search according to your most essential criteria. If you have a team doing the research for you, discuss and provide clear guidelines to aid the search process.
For instance, carry out a specific search by identifying neighborhoods, streets and sites where a residential project is likely to do well and bring greater profits. Compare different sites across locations to determine which one is worth your capital.
Use ordnance maps, private maps, real estate advertisements and tools such as drone photography, GIS (geographic information system) and Google Earth to get a bird’s eye view of the sites. Big players go beyond the local neighborhood, and as they expand, they get more interested in owning and developing real estate across cities, states and even countries. For your company to move to large-scale interstate or international projects, it is advisable to first gain experience finding and developing sites locally.
Selection of land for housing is driven by several factors, such as amenities in the neighborhood, the demographic of the chosen location, property market in the area, local rules and regulations governing land use and development, and real estate trends. Once you have zeroed in on a plot of land comes risk assessment, which is crucial for you to determine whether it’s possible to buy and build on the chosen site.
While many investors make buying decisions on the basis of maps, experts advise against the practice of taking short-cuts when buying real estate and insist that the stakeholders visit the site several times before making a decision.
Today real estate companies have a plethora of advanced digital tools available to aid their buying decisions. The leading mapping service http://www.promap.co.uk/ is one such company that offers developers, builders, land agents, environment consultants and architects detailed maps and datasets that help in feasibility and risk analyses. The maps can be exported in a number of different formats, customized, annotated and used to generate flood risk and utility reports.
If you’re looking to renovate an existing building, look out for underutilized sites, dilapidated buildings in need of extensive improvements, and old buildings that are well located but not well constructed. As you personally visit the shortlisted sites, you’ll get a clear idea of what local real estate is like, which will greatly aid your decision making.
Once you’ve found the ideal site, contact the Local Council to obtain planning permission—you can do this for more than one site. Depending on the type of development or construction you’re planning—such as renovation or extension of the existing building, construction of a single home or development of a housing complex with several units—find out the key regulations governing the development and the restrictions that apply.
Once you’ve obtained the necessary clearances, it is time start on the next phase of your real estate development project—that is, designing, followed by actual construction.