Property development is one of the most effective wealth-creation strategies that can help maximise investors’ cash flow. As savvy as this strategy is, investors must determine whether or not they are in the right position before developing or expanding their property.
Regardless of the reason for developing, there are several important factors investors need to consider to ensure they get the most out of the process.
When beginning the development process, investors should be looking at how much they can borrow. There are many factors that affect how much can be borrowed, such as annual income, monthly expenses, number of dependents and the proposed term of the loan. At this point, it should also be considered if it is the right time to consolidate any debts and whether the investors banking structure still suits their current situation.
Identifying objectives and long term property goals is a key step in the planning process. Understanding what the goals are from the beginning means investors have a better chance of meeting their current and future needs. Whether that is adding to your portfolio or realising further investment capital, by knowing what you want to achieve before you start, you are in the best position to accomplish your goal.
Larger properties come with higher costs in regards to maintenance, taxes, utilities and insurance, so investors must remember to include these factors in their development decisions. Investors also need to consider the physical aspects of developing property such as the topography of the land, boundaries, service lines (electrical, plumbing, etc.) and any council restrictions you may encounter. To make sure there are no unwanted surprises at settlement time, it is important to take into account any other costs of developing.