Negosentro | How to Start a Property Development Company: The Basics | Typically, a property development company will focus on a specific sector of the market. Some will develop residential properties and others will be commercial property developers. With that in mind, the one thing that many people don’t really understand is that you don’t need to be a builder or contractor to start a property development company, although it does pay to have a working knowledge of the industry. Quite often real estate investors start their own property development companies because in the course of their investments, they recognized a real need in one sector or another. Once that has been decided, it’s time to start your company.
Build a Team
The first thing you will need to do is build a team. This usually entails those who work in the office at first. They will set up appointments, be your liaison with contractors and handle the day-to-day business. An office manager would be a good start. Bear in mind that these individuals should have experience either in real estate, construction or both. They will need to be able to communicate effectively with contractors, investors and any interested parties.
There will undoubtedly be a number of contractors working on any project. From architects to civil engineering companies, plans need to be drawn up and approved prior to construction. Always vet your contractors prior to drawing up an agreement. Look at their reputation in their respective industries and see if they were able to complete projects within budget and time constraints. When accepting bids, take the time to vet each and every submission prior to setting up a meeting. You won’t be wasting your time if you interview only those who have checked out according to your standards.
Financing Is Imperative
Although this should be your very first consideration, you may need to continue getting other investors or lenders as the development progresses. Financing is imperative even before you break ground. Nothing can be done, and no one can be paid if your financial affairs aren’t in order. Whether you take out construction loans or are backed by financiers, funding is the most important initial consideration.
Whether your buildings will be rented or sold, it is suggested that you start marketing before the project is completed. Hire a marketing firm that is familiar with real estate and are able to elicit interest in your properties. It could be a suburban housing development, a commercial plaza or even high-rise condos, but marketing must begin before those properties are ready to be occupied. Bear in mind the longer they stay unoccupied, you will incur a substantial loss on your ROI.
These are just the basics. Keep in mind there is much more to it than these few tips, but they should give you an idea of what it will take to start a company. Don’t forget to get all your legalities out of the way before beginning construction and always carry more insurance than you feel may be necessary. It’s always better to be safe than sorry.