Good property development involves following a number of important steps. There are nine ‘pillars’ of appraisal; each one should prompt you to stop and ask yourself some important questions as you go through the process. Below are a few of the questions you should be asking:
What issues could affect the demand for your finished properties when they are ready for marketing? For example, is a major employer moving in or out of town? Do you know the values of different property types in your chosen development area?
Have you looked at the planning application process for your project, and asked yourself "what if"? Are your timeframes realistic? Do you have people in your team that fully understand the planning process?
Have you considered different scheme design options for your site? For example, have you looked at the difference between developing a block of apartments and a row of town houses on a new build site?
Are you talking to a lender directly, or to a suitably experienced broker, ensuring the correct information gets through to them clearly and quickly? Are you telling lenders and/or investors about all of your prior experience? This does not have to be directly related to development. Are you skilled at negotiating terms that you're happy with?
Have you looked at every deal structure option with an open mind? Might the vendor be unaware of the possible benefits of agreeing a lower initial purchase price with payments at stages or at the end of the project? Could it be advantageous from a tax perspective for the vendor to retain a number of the completed units, for example?
Have you drawn up the correct type of contract that's bespoke to your project's needs? Does your lawyer have prior experience of working in property development – have you asked them? Have you asked if the vendor's lawyer has experience too? It's much easier to have experienced lawyers working for all parties.
Are you certain you've correctly accounted for costs – including the site, build, professional fees, developer contributions, finance, exit costs and profit? Have you added anything on as contingency for unseen costs? And have you also included a time contingency for the project period?
Will you be the Main Contractor or will you be employing one? Are you using the services of an experienced project manager, and have you managed to get them on-board from the start? Have you worked with them to draw up an effective programme so your project will come in on time and budget?
Have you got a plan A and a plan B for your exit strategy, such as selling or renting? What will you do if your newly-developed units won't sell, or you can't achieve the minimum price you were hoping for? Have you considered the possibility of selling your project once planning has been granted?