Property development incorporates a wide variety of tasks and responsibilities including the acquisition of land, building construction, renovation of existing properties, maintenance and the subsequent sales or leasing of the property. It can hold a great deal of risks but if done successfully it is potentially a highly profitable venture. What are some of the key points to consider if you are looking to enter this field of work? There are great differences to consider such as whether you are entering the residential or commercial sectors.
Clearly this represents the development of properties in which people will be living. This means that once it comes to selling or renting the properties they will need to be attractive to individuals rather than businesses and with this comes different things to factor in. People will consider figures when it comes to purchasing or renting but this will be compared with location, design and amenities etc. more so than a commercial property which will tend to be purchased with a greater focus on financial reasons. People buy residential properties with their heart as much as their heads so you can’t be developing a residential property solely by the numbers.
So given what has just been stated about residential property development, when in the commercial sector you will need to be very aware of the market and costs because a business will want the best possible deals as they look to maximise their returns and reduce their overheads. Obviously location and facilities will be factors which will need to carefully incorporated into your pricing but the relative costs will be of key importance. Unlike residential properties, commercial ones will be rented out with a greater consideration of numbers.
Something to consider is the level of capital involved between the two sectors. Commercial properties tend to cost a much higher price than residential buildings so the returns can be higher, however the actual development costs can be also. Large-scale developments such as office blocks or shopping centres will need vast amounts of investment and funding to successfully complete. Another thing to consider is adequately appraising the correct rental value of a development. Within residential projects it is relatively simple to compare and contrast other properties and develop a reasonably accurate valuation but within commercial property development you will likely need professional help or years of experience.
Generally speaking a residential property developer will be responsible for the costs of the ongoing maintenance of a property if it is rented. Commercial property developers can normally expect the tenant to have to cover these costs themselves. This will obviously hit your return on a property so it will need to be carefully factored in when forecasting your future incomes.
This will vary from country to country and even between regions so as property developers you need to carefully examine all the different legalities. These will have an impact on costs, responsibilities and obligations which if not adhered to will cause incurred costs or legal complications which could at worse put you out of business. Make sure that you always understand all of the different legislation in the area you wish to develop and how it differs between the sectors.