Property development is an enterprising sector with the potential to earn substantial profits. Though there are many opportunities in property development, you must first understand the industry fundamentals.
Property development can involve upgrading a pre-existing property or purchasing land and developing a new one. To complete a development project, you may need a cash injection.
If you do not already have the funds for your project, you will likely need to apply for a loan. You could go down the typical loan route, but that could delay your development by months, and high-street lenders do not favour ground-up developments.
At Bridging Finance Solutions, we can provide you with the necessary finances in a matter of days with a fast bridging loan to jumpstart your development project.
Read on if you want to learn more about what to expect in property development.
Types of Property Development
There are four main types of property development, and you should know which development you intend to complete, as each presents unique challenges. Understanding these challenges can help you better prepare.
Residential Development
This is the most common type of development, consisting of building or improving residential properties. Residential development ranges from the development of small-family homes to large apartment complexes.
Residential developments have relatively straightforward planning requirements, making them a popular choice for new developers. Get in touch with our team for further information on residential bridging loans.
Commercial Development
Commercial developments often gravitate towards creating retail, office, and mixed-use spaces. Due to the nature of these developments, you can expect to gain higher returns, but you can also expect greater risk.
The demand for commercial properties can fluctuate, so you need to carry out substantial market research before committing to a commercial development. Current high-demand areas include a lot of locations in the North West (such as Liverpool, Manchester, and Salford specifically), with many businesses continuing to shift northwards due to affordability.
Industrial Development
Industrial development includes factories, warehouses, and distribution centres. It can be quite lucrative in areas with growing industrial sectors.
You do have to take into account that industrial developments require an understanding of the stringent zoning regulations.
Mixed Use Development
These developments combine residential, commercial, and recreational spaces into a standalone project. They are growing in popularity because they can save land space and build communities.
Mixed-use developments are substantially more complex than others, so you must work with someone with years of development experience. It can be difficult to get standard government funding for these properties. Surround yourself with professionals who have relevant experience. We wouldn’t recommend this if you are new to development.
Key Stages of Property Development
Now that you know more about the different types of property development, here is an outline of the key stages you can typically expect to follow when developing a property.
Land Acquisition or Property Purchase
The first step in any development process is identifying and securing a site. You may see potential in empty land or a property that requires refurbishment.
Though this is often labelled the easiest part of the process, it can actually be incredibly difficult, especially since picking the right site can impact everything else going forward. Before committing, you must assess whether the site meets zoning and planning regulations.
Evaluation of The Project’s Feasibility
Evaluating the project’s feasibility is essential before committing significant capital. At this stage, market research is essential for decision-making. Look at the local market, as this will help you estimate development costs and learn more about the sale or rental income.
Understanding the local demographic can help shape the success of your development project and inform you about whether or not it should be pursued.
Planning and Design
Before you can finalise a property development, you need to plan and design it. Once the site has been secured and you have assessed its feasibility, you can work with architects and planners to design the project.
You are required to create detailed blueprints and decide on the materials to use to build the development. You also need to plan your amenities, particularly focusing on what will attract potential buyers and renters.
Securing Planning Permission
All property developments require planning permission and permits from local authorities, which can take time to obtain and may require adjustments. Securing planning permission is a critical part of the development process, as you must start with it.
Financing The Development
Once you have the go-ahead, you need to consider financing the development. Property development requires a lot of capital. It is unlikely that you will have the financial resources to start your development, and a development loan may be necessary to move the project along.
If you take out a typical loan, it can be months before you receive the cash injection you need, which can delay your property development. In the development world, bridging loans are often the preferred project financing method.
Bridging finance is a great option if you require a quick cash solution; due to its speedy delivery and flexibility, a bridging loan can be the ideal choice for a development project. Working with a principal lender such as Bridging Finance Solutions lets you quickly get the funds you need.
Construction
Once you have secured the necessary finances, you can proceed to the construction part of the development process. During this phase, astute project management is essential to ensure the success of the development.
Coordinating with contractors and suppliers is important to ensure that the project adheres to the originally confirmed designs.
Marketing The Property
Once the development is near completion, marketing the property to potential buyers or renters is an important part of the process. This step can be skipped if you intend to use the property as a residential property for yourself or your family.
However, if you wish to rent the property out, it is important to attract potential renters quickly so that you can begin to generate revenue as soon as possible.
Make it Happen With Bridging Finance Solutions
We hope we have clarified the importance of thorough planning throughout the property development process.
Financing the project is one of the most essential steps in property development. Without the relevant finance, your project will not advance. It is vitally important you select a funding source as soon as possible.
If you are planning or currently working on a development and need a cash injection, contact our team today to find out more about how we can help you finance your next project.
Make it happen with Bridging Finance Solutions.
