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Property Development Pitfalls – Lessons for Newbies

Property Development Pitfalls – Lessons for Newbies

Property development is an exciting field. In addition to being potentially lucrative, property development allows people to create buildings that will help serve residents, commerce and the public. Property developers build the infrastructure on which society is built. New property developers, however, often make mistakes that can lead to considerable financial difficulties. Here are some common property development pitfalls.

Is there growth?

No matter how great a piece of land is or how superb the buildings on it are, there must be people or companies that will use it. Apartments and commercial builds do not sell themselves, and there must be sufficient demand to ensure a profitable venture. Property developers must carefully research the land and the areas that surrounds it. While some parts of the Australia are growing at a tremendous rate, there are other areas with negative growth and stagnant economies. Of all the common property development pitfalls, this might be the most dangerous.

What about regulations?

Regulations are necessary to ensure that buildings are safe and will not cause problems. While some cities have few regulations, other make it difficult to secure permits for certain types of buildings. Height restrictions are common, and developers must keep this in mind. Environmental regulations are often strong as well, and these may make the cost of development prohibitively expensive. New property developers are encouraged to talk with town-planning experts before making a purchase or starting construction.

Tax breaks?

Taxes are a major expense of property development. Often, however, governments provide tax incentives for certain types of development or certain building techniques. Buildings designed to have a minimal impact on the environment, for example, may qualify for major tax breaks. Property developers must look for these tax breaks and find out if their buildings can earn these incentives. A tax break, for example, might save enough money to build a more impressive structure that will be more profitable in the long term.

Other investors?

Investment is crucial for succeeding. Too often, however, property developers fail to reach out to others who may be interested in investing in the project. While a small development may be acceptable, new property developers often fail to consider if outside investment could enable them to create more impressive, and profitable, structures. Property developers must ensure that they are getting as much out of their land as possible, and a few extra investors can make the difference between a decent property and one that leads to tremendous profits.

Property development is not for everyone, although almost anyone can do it. Many people use this strategy for the excitement and glamour of it all and that is exactly their undoing.

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