Tools such as property valuation and real estate development software can prove to be invaluable for developer and investors. Whether you’re a property developer or investor, accurate valuations and feasibility studies will form the basis of your most successful property projects. Here, we look at the advantages and potential limitations of using valuation software or self-design spreadsheets for these purposes.
1. Specific Requirements
Some users may opt for self-designed spreadsheets to tailor the spreadsheet to their specific requirements. However, many property valuation software programs actually include features that allow a large degree of flexibility on a spreadsheet-like interface. These features will allow you to input your own factors to complicated reports and formulas.
Property development is potentially one of the most rewarding undertakings. Budgeting and cost management is, of course, an important facet of large development projects. With good time management, a team of good advisers, and useful tool such as real estate development software, costs can be controlled to support the developer in meeting their financial goals.
Choosing the Right Development Site
Along with conceptualising a viable project design, choosing the development site is one of the important early steps for enhancing cost control of your development project.
To determine a fair price for the site, developers can conduct market research; investigate zoning issues, local market conditions and other development projects; and use tools such as property valuation software to determine the optimum price they would be willing to pay for the site to achieve their desired returns.
The question of commercial property or residential property is a common one for investors and developers alike. While residential property provides a diverse range of property types such as apartments and units, commercial property offers retail, industrial, office space, and other commercial categories. When looking at their financial benefits, developers often rely on real estate development software to forecast the returns of either type. In this article, we examine the advantages of both property categories for development.
While this is not always the case, commercial property development projects will often be larger in scale than residential projects. The scale may refer to the number of offices or residences being built, or it may refer to the cost of the project itself.
In Australia, the contest between shares and property is an ongoing one. While the two are often presented as alternatives, the fact is that they’re very different investment vehicles. Which one is best for any individual or entity will depend on the particular circumstances.
For investors, tax can be considered a cost of investing. While considerable tax breaks exist for property investors, there are generally fewer tax exemptions and deductions available to share investments.
Depreciation, mortgage insurance, repairs, bank charges, advertising, cost of purchase, rates, management fees, interest, and capital works are just some of the expenses that can be deducted on an investment property. If you’re a developer as well, further deductions may apply which can be calculated with the assistance of real estate development software.
Many property investors and builders move into property development; however, anyone with a passion for property, good management skills, and an eye for a good site may find property development to be rewarding. In this article, we look at the major advantages of becoming a property developer.
1. Build a Large Property Portfolio Faster
Getting into development can be an excellent option for keen investors looking to accumulate a large property portfolio. Instead of selling the properties upon completion, a good proportion of developers choose to retain the entirety or a part of their development project once it is complete. Real estate development software is used by new and experienced developers alike to create accurate feasibility studies to determine the financial returns between retaining a development upon completion as a long term investment asset or to sell it for a short term profit return.
A good property manager can prove to be enormously valuable to landlords, helping secure excellent tenants, managing repairs and improvements, and conducting periodic rental reviews. Other than reputation and a solid track record, there are characteristics that property investors should consider when choosing a property manager.
1. Process for Determining Rental Values
Most property managers or management companies will conduct periodic rental reviews, and make sure that property yields match market values. Using property valuation software is an effective way of calculating real estate values and applying the correct rental price to any investment property.
- Period for review. How often will your manager review rental returns? Is this in line with industry practice? This will depend on whether it is residential, commercial, industrial, or other type of property.
- Process for review. What is the process for review? On what information will the manager ascertain the rental value?
- Existing clients. What is the process for lease renewals and rent reviews for existing clients?
Most developers would probably rank choosing the development site to be one of the most crucial aspects of the property development process. Along with a valuation of the site itself, which can be accurately conducted with property valuation software, in-depth research and professional advice are excellent strategies for selecting a site that will not only attract buyers, but also reap generous profits.
1. Feasibility Studies
Using sophisticated real estate development software, developers are able to conduct a feasibility study to help them get an accurate value of the site they are considering purchasing. It will also allow them to project expenditure and revenue for better planning and forecast performance indicators such as profit, the internal rate of return and net present value.
Once a developer finalises a property development plan, they’ll usually be seeking to maximise the potential of their idea and the chosen development site. To realise their development plans, adequate financing is crucial, along with an accurate feasibility study which can be produced by using real estate development software. In this article, we look at how to plan for the financing aspect of your property development project.
Most lenders will stipulate a minimum and maximum lending amount, minimum property value, as well as minimum and maximum loan terms. It’s a good idea to keep these in mind while you’re shopping for a lender, as a quick criteria to use during the early stages of sourcing financing.
A project manager (or property development manager) can be a valuable team member for property development projects. Like line managers and senior managers in large organisations, property development managers assist the developer with coordinating the team, budgeting and cash flow, delegation, as well as technical know-how. Project managers can and ideally should be involved in the project from the earliest stages.
Planning and Coordination
Property development managers coordinate the entire team, make certain that everyone is fulfilling their role according to the schedules, and keep the momentum going as the project moves from one phase to another. Experienced project managers can be brought onboard to assist with planning and feasibility, together with appropriate real estate development software to ensure technical accuracy.
Budgeting and Cash Flow
Whether it’s a commercial office development, a residential housing project, a block of units or apartments, or an industrial development, property development projects come in all shapes and sizes. For this reason, obtaining specific advice from technical advisers such as town planners, engineers, and architects can save the developer money and streamline the entire process from conception to construction. Here, we look at when and how developers may find it useful to obtain advice from their architect.
Even before assessing feasibility with real estate development software, developers will need to check a site or basic project plans to ensure that the project is physically viable. Developers can check with their architects at this stage and request schematic designs (rough sketches) to help visualise the project and provide a sound basis for proceeding to the next phase.