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.
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?
Accurate and effective budgeting is pivotal to successful property development projects. Property developers are required to manage and make decisions on many variables on a day-to-day basis. From initial budget estimates to accurate cash flow projections, effective budgeting from the outset keeps developers on track and enables better decision making at all stages of any project. Now that sophisticated and intuitive real estate development software is available, it’s easier than ever to effectively budget for your property development projects.
1. Application for Financing
Property development projects require plenty of creativity, management skills, and tenacity. In return, successful projects can reap the developer considerable profits. From getting started to putting a team together and managing your projects with real estate development software, these are some of the key steps in any property development project.
1. Getting Started
Understanding the process is the key first step in getting started in property development. The entire process can take anywhere from six to 24 months, and sometimes more.
Gantt charts are commonly used for any type of project management including property investment and development projects. Typically incorporated in to full-featured property valuation software, Gantt charts are bar charts that graphically illustrate the schedule of a project from start to finish dates and the key summary elements in between. In this article, we take a closer look at Gantt charts and how they can benefit investors and developers.
Gantt Charts – an Overview
The Gantt chart is name after the first known person to have used this chart – Henry Gnatt, who designed the chart from 1910 to 1915. Gantt charts were widely used during the First World War for administration and government product and work. With the rise of personal computers in the 1980s, Gantt charts entered the mainstream.
Sensitivity analysis is a standard feature for more advanced property development and property valuation software programs. At a general level, it refers to a statistical concept in which one variable is changed and other variables are held constant. This allows modellers, including developers and investors, to ascertain and review the effects of each variable being changed. Usually the analysis will be conduct to asset the net present value (or other key performance indicators) of the property and work out which are the best scenarios for buying or selling investment property.
The following are just four of the most common types of sensitivity analysis that can be performed on real estate development software, analysis which can significantly assist developers and investors with getting an accurate picture of the project at any time.
Managing development projects involves the developer taking into account a broad range of issues. Once the developer has completed the necessary due diligence and feasibility assessments, the project is ready to begin. Most development projects are complex and multifaceted in nature, and developers recognised that effective management is central to reduce risk during the development and getting the project completed on time and as intended. Real estate development software can play a significant role in assisting developers with managing ongoing projects.
While most costs associated with property development (such as development approval costs, operational expenses, acquisition expenses, and title and sealing) are usually fixed and relatively easier to manage, there’s one particular cost item that developers tend to watch carefully. Construction cost, by nature, are usually the largest expense item on the property development balance sheet. A small change in the construction costs, caused by delays or change in availability of materials, can lead to significant alteration in the margins for the project.