Having a dream of developing property – either in the form of large scale refurbishments or building a property from scratch – is not uncommon. From the outside, property development appears to be a lucrative process – and one that many people think they could ‘have a go at’.
Whilst barriers to entry are few, the potential for making mistakes – and spending a lot of money in the process – are vast.
Here we provide some top tips for property developer taking the leap for the first time.
Spend time budgeting
A development opportunity may seem like a good prospect on initial calculations. However, depending on the scale of the development, a simple spreadsheet error, a pricing oversight, or miscalculation can make the difference between making a significant profit – or not.
Seasoned developers have a team of regular contractors they call upon that they will be able to ascertain good rates from. From experience on other projects, they may be able to spot potential issues; allowing them to factor these into the price.
Developers with less experience may not be as adept at accurately pricing a project. Always allowing for 10-15% of the construction costs as a contingency is essential as you will almost always encounter unexpected costs.
Don’t forget to factor in time
Without a solid plan in place and a network of reliable contractors and suppliers to call upon, delays can easily derail a project. From delays to the delivery of materials, to being let down by contractors along the way, the knock-on effect of each individual delay can amount to the project timeline taking weeks or even months (or years!) longer than anticipated.
The longer a project takes to complete, the longer you will have to pay interest on any borrowing before generating a return. Delays can account for some of the biggest costs to development projects.
Call in the professionals
Too many new developers think that it would be a good idea to manage their projects – either because they think the job is simple or they want to try and keep costs to a minimum. In reality, managing your own project can be time consuming, stressful and can often work out less cost effective than hiring an experienced project manager or employing a single main contractor.
Lea Hough are regularly appointed to provide full project management services for developments, including extensions, conversions, refurbishments, planned maintenance and restoration works to existing buildings, through to new-build schemes.
Our unrivalled experience of dealing with building contracts means we are ideally placed to represent private clients and companies throughout building works in a Contract Administration role. Clients instruct us to help ensure a quality build is delivered in their required timescale whilst minimising cost. For more information, please get in touch.
