Property development, like any other kind of business, relies on minimising costs and maximising profits. But many of the more popular cost-cutting measures can, in the long-run, turn out to be false economies. After having completed multiple projects, you’ll have an idea of where the costliest mistakes are to be made. But at the outset, you can give yourself a head start by learning from the mistakes that have already been made by others.
Go DIY where you can
Bringing in skilled tradespeople to work on the property can be enormously expensive. An electrician might charge thousands for a rewire; a plumber might do the same if there’s extensive pipework to be installed. If you can do any of these tasks yourself, then you’ll ultimately save yourself a packet. If you’re leaving a skilled profession to become a property developer, therefore, you’re at a huge advantage.
At the same time, corner-cutting could ultimately have a negative effect on the sale value. If you attempt to do something yourself, and you don’t have the skill to do it competently (or safely), then you might end up wishing that you’d bitten the bullet and brought in a professional. The fundamental skill, then, is knowing when to outsource work. Bringing in the right equipment for the job is also crucial – form a good relationship with your industrial equipment supplier, and it’ll pay off in the long run.
Stick to your Plan
Planning and preparation are your friends when it comes to developing a property. Costs will inevitably escalate when you make things up as you go. Write down the ultimate budget and objective, work out the milestones along the way, and then map the spaces between those milestones. You might even bring in professional management to help you with the planning stages.
Of course, once you’ve formed the plan, you’ll need the discipline to stick to it. Over time, you’ll learn to recognise when you can deviate from the plan. Most of the time, it’s better not to.
Use cheaper materials
It’s easy to spend big on fancy tiling and architrave. But if you can get the same effect from cheaper materials, then why spend extra? With a little bit of creative thinking, you can slash your build costs significantly. You should have formed a budget at the planning stages – look at this as a maximum rather than a target.
Focus on where the value is
Certain areas of a property, like kitchens and front porches, have a bigger influence on the value of the home than second bedrooms. Splash the cash accordingly, and accentuate these features with the luxury décor that you might otherwise reserve for a more expensive property.
Do your Research
If you want to stand a good chance of selling the property for the highest possible price, you’ll need an idea of what the market is actually looking for. Know the demographics you’re selling to and what they’re looking for in a property, and use that information to shape your plan. New families will want space and bedrooms; younger professionals might prefer a home-office space.