Property development is a business process in which one purchases a piece of land or buildings then make some improvements to them so that they can be resold at a higher price. They buy something thy see potential in and fix it up to match their vision for it and sell them for much more than what they bought it for.
Property developers follow a distinct set of 7 steps in order to receive the best results, it’s a process they apply to each property they’re looking at purchasing and improving.
The 7 steps go as follow:
- Concept stage
- Town planning
- Working, drawing and documenting
Now let’s dig a little deeper into each one of these steps.
This is a fairly self-explanatory step that consists of searching for a block of land or existing property and determining if there is enough potential to refurbish the existing structure, or seek developmental approval to build. When you look at it, can you see ideas forming or see it’s worth beyond what it is now?
Once a potential site has been found, a concept must be developed. This is done by asking some of the following questions.
- what can be put on the site?
- How many units?
- How big?
- What restrictions are there?
To answer these questions, a property developer has to understand the local council’s development and planning policies. This is usually free and can be done online. After everything is taken into consideration, and a property is deemed viable, a bid is made for the purchase.
The property is purchased for a price that will allow for commercial profit. This step involves in depth negotiations to get the best deal. Paperwork and contracts are made until both parties are happy with the outcome.
Town Planning and Development Approval:
It’s best to have an architect as part of your property development team so when the time comes, the architect will draw up plans that will fit within the planning codes and guidelines as well as meet your vision of the place. This sometimes takes compromise.
Working, Drawing and Documenting:
Once the development team has the permit for the development, the architect will team up with the engineer to create drawings that will serve both as instructions for the builders as well as documentation for the building permit or construction certificate.
This stage is mostly getting quotes from prospective builders and bank approval for a development loan.
While the building is being constructed, the developer is paying the builders from the bank loan. They are also busy getting subdivision approval from local council
Once construction is completed, the building is ready to be leased or sold. This requires separate titles for each unit. Most developers sell the building.
There is a great deal that goes on behind the scenes of property development. It requires a team of builders, architects, engineers, brokers and much more. It requires patience and time, but it is very rewarding.