Turning a property development from a vision into a reality is a complex process which requires a range of unique skills, knowledge and character traits, and most crucially requires creativity, strategy and planning. Each stage of the property development process is critical to the eventual outcome, and while every property development project is different, there are key things you need to consider and plan which will apply to every project.

This article is designed to help you create a vision that is realistic, and also explain the process of turning that into a tangible development that has a lasting impact. In this sense, strategy can make all the difference in terms of success and failure, and perhaps the most the most important thing to remember is that your strategy can be different for every single property development project, because every different project has unique circumstances and objectives.

Property development can be an ambitious and rewarding experience, if done well. But it is important to note that everyone has their own ambitions and their own measures of success. So a property development project for one person could be helping out a son or daughter by turning an old Victorian property into a suitable house for five students as a retirement nest egg. Or it could be identifying the growth potential in a region and developing a multi-plot commercial estate to create a lasting impact for a whole community. There are many examples in between these extremes and it’s important to remember that property development can be a ground-up commercial or residential development, or it can be renovating existing properties for commercial or residential use, and this can be to serve the rental market or to sell. So:

• Defining your individual ambition for a project – this is the first thing you need to establish, ie. what do I want to achieve with this development? You can have personal ambitions which are purely financial and which can involve commercial or residential developments, but you can also have sustainability ambitions or community ambitions which have a much wider scope and a grander overall impact, but are still required to be financially viable.
• Identify a need in the market – does my development idea satisfy a current need in the market? Is there likely to be demand for what I develop when it eventually comes to the market? This could be rental demand for a commercial property or sales demand for a certain type of residential property.
• Location – can you find a location that suits your vision? It needs to have the growth potential to justify the venture, it needs to have property values that suit your ambitions and it needs to fit with the market demographic that you are aiming for.
• Market trends – is this a good time for you to secure the sale or rental values you need? To turn your vision into reality requires cold, hard cash, so are the cost projections you are making realistic in the current property market?
• Risks and rewards – you can roughly assess what the potential risks and rewards of a project are and whether the overall concept is worth taking to the more detailed ‘feasibility study’ stage.
• Feasibility study - this is a detailed and multi-faceted process involving your personal finances and the current situation with lending and the economy, and it also involves the physical nature of the development. So is there sufficient infrastructure in terms of utilities? Would you be able to secure planning permission? Will there be environmental impacts? Are there technical or engineering complexities that will add unmanageable costs? A feasibility study is a comprehensive assessment of how viable the project is in its current form, and from this you can make certain tweaks and adjustments to make it more appealing, but also to see if it still fits with your original vision and ambition. Ultimately, a development still needs to align with your original vision, and after a feasibility study you can either change your initial strategy, or you may decide the project is likely to veer too much from your original goals and ambitions to mean it is not feasible. That is perfectly OK, and the whole idea is to identify this now, before it’s too late.

It is very easy to have grand ideas of course, and even if they are feasible and realistic ideas, turning them from a few sketches and lines on a piece of paper to physical bricks and mortar is another matter entirely. You can’t hope to do that without a comprehensive development plan.

This might sound like a daunting prospect but it is effectively setting out a roadmap for how you are going to achieve this development. So this will involve establishing the objectives of the project, which we have already done above, but this plan will also define the scope, set out a rough timeline and then assess what resources will be required. There are a number of factors to doing this.

• Budgeting – you need to be wise with how you budget and this perhaps becomes easier with experience. We will look at the finances in more detail in a later section, but essentially, how are you going to make money from the development and how much is it going to cost you to add the required value to the development? If you are in the rental market then you are expecting to receive a steady income from your tenants, while selling a property doesn’t necessarily liquidate the cash that you need, or at least not as quickly. So how do you add value and make the project profitable? And is that realistic and achievable? You also need to manage your budget to ensure your costs are under control, you are making the money you need to out of the project and that you always have the cash available that you need. It is always wise to factor in a ‘buffer’ or contingency amount also. This is an amount of cash that is available for emergencies or unforeseen circumstances, such as void periods where you can’t rent or sell the property and therefore have no income, or where you have no other liquid cash available and need to pay contractors, fees or professional advisors.
• Building a team – one of the most important elements of successful property development is having a team of people around you who you can trust. There are so many facets to property development that no one should be expected to be an expert in all of them, and if you think you are, this could be your undoing. So you need trusted and reliable contacts such as architects, designers, planning experts, engineers, solicitors, estate agents, accountants, financial advisors, builders and sub-contractors. Their professional advice at key moments can make or break a development and as you get more experienced you will learn to trust their advice even more.
• Compliance – it is essential that you understand all the legislation surrounding your project and how compliance can affect it. You need to have good knowledge of the planning laws and how they relate to your development project. In the team you assemble you should try and associate yourself with someone who has the inside track on current and future planning situations as this can give you a head-start on a profitable project, and can also stop you making costly mistakes. This could be spending time and money on a project which you later discover is completely unfeasible due to planning laws or restrictions. Compliance also involves having experts in environmental law and health and safety law, as these areas could prohibit a development or add extra cost.
• Marketing – the vision of your development plan needs to extend to how you market the development when it is finished. Planning for this should really form part of your original vision and concept, ie. are you satisfying a need in the market? If you are then this step should be a little easier. But essentially, how do you attract people to your development? Maybe you are marketing the end result on its sustainability potential? Maybe you can offer some incentives for businesses to enter into rental agreements for your commercial property? Maybe you have built a serviced apartment block, so you need to market the luxury features such as concierge, laundry facilities and on-site gym to young professionals? Every development project should be delivering something for the market, so your marketing plan involves communicating this to make sure people know about it.
• Project management – again we will look at this in detail in the next section, but effective project management is using planning and directing skills to see the project to fruition. So this involves having visibility of finances and managing this accordingly, assessing quality control and managing individual contractors. All this needs to be maintained in line with contracts and timelines. It is also important to keep an eye on finishing touches such as landscaping and infrastructure because these are often the things that the public see and which can have an effect on public relations, which consequently can affect your marketing plan. Don’t rule out appointing a dedicated project manager to oversee all this, obviously it will add cost but, particularly if you have numerous developments ongoing concurrently, a professional eye on this can pay dividends in the long run.
• Post-development – your responsibilities don’t end when the development is signed-off, although contractual agreements will largely dictate this. You need to provide support for buyers and tenants and you need to be vigilant to respond to maintenance requirements and corrective actions. There is often a ‘snagging list’ of minor jobs that need to be rectified or finished off, or details of the final spec that a tenant or buyer isn’t 100% happy with. Attention-to-detail and customer service is important at this stage in terms of your marketing plan. You should ensure you maintain open communications at all times until everything is signed-off as this will positively impact on your reputation as a property developer, both with the market itself, but also with the team of professionals you are building up around you.

It is one thing writing out a comprehensive development plan, but making sure it comes to fruition requires another set of skills altogether. So how do we manage a project to make sure it translates into a physical structure? A key element of this – and many things – is money.

• Costs – Having visibility of your finances throughout every stage of a property development is absolutely crucial. Ultimately you need a return on your investment, but that can be different for every project and every person. Your individual ambitions are entirely dictated by your personal circumstances and goals, and while you want to return a profit on every project, the size of this can vary and it may even be OK to break-even on a development if it means you can free up cash quickly to then invest in another potentially more profitable project. Of course you don’t want to lose money, so understanding the difference between debt and equity is perhaps the first thing you need to learn. After that you need to ask key questions such as:
• How much will this finished development be worth?
• What will it cost to buy this land/property?
• What will it cost to develop this property?
• Can I add sufficient value to make the project profitable?
• Where can I secure the necessary finance?

So this requires having some knowledge and visibility of current market trends and also understanding the various development costs. In terms of securing finance, you need to factor in how long this could take, particularly if there is an element of risk to the project. You may also want to consider partnering with an investor and creating a more formal structure. You should be able to make cash-flow projections to establish what cash you will need when, and then you can manage the project to ensure money is available when you need it and the project remains profitable.

• What are you buying? Like any property transaction you need to have a comprehensive understanding of every element of what you are buying, so this is the structure, the infrastructure, the land it is built on and any planning issues that are or could impact on the marketability of it. So this will involve detailed surveys and you may also want to take advice from builders or engineers on how certain issues may affect development costs. Problems found in a survey can often be overcome, but only if the project remains profitable, and this is something you can negotiate with the vendor.
• What adds value? This comes back to understanding the market and satisfying a market need. So what is it about a property that is going to attract people and make the prices you are charging acceptable? A house on a road with limited parking would benefit from a driveway and/or a garage, for example. Can you create that? A house of multiple occupation (HMO) for students with limited income doesn’t need hi-spec kitchens or bathrooms, they can’t afford what you will need to charge as rent, but young professionals have higher expectations for an HMO. A family house in a lucrative suburb might want decking or a summer house in the garden, but a family moving into a three-bedroom terrace in a lower-income area won’t want to pay for those kind of features. So target your development to the market and only spend money and add value on what will suit market expectations.
• Catering for the market – As a follow-on to adding value according to the market expectations, you should also cater for the market rather than your own tastes when you are marketing a property. It can be difficult to be impersonal or detached when so much is at stake, but you need to remember you are selling or renting to a certain type of person, and not yourself. So when thinking about specs, furnishings, décor etc think about what your market would want and expect, not what you like personally. This is the best way to sell or rent a property quickly.
• Have an exit strategy – this is an essential element of every property development project and basically translates to knowing what success or failure is. To a large extent this is achieved by having complete visibility of your finances, but for each project there is an individual goal, and if you can see that isn’t going to be achieved, what are your options? Your exit strategy needs to include what options you have in each scenario, so you can sell at a lower price, lower the cost of renovations or change your marketing strategy for how you will eventually sell or rent the property. Inevitably this will impact on your profitability, but cutting your losses – and most importantly, knowing when to – can sometimes salvage a project and minimise the damage.

One of the few consistencies between different property development projects is that you will encounter obstacles and unforeseen circumstances, pretty much without fail. Often these lead to costs you hadn’t accounted for and they always lead to difficult decisions. But in order to manage these likely bumps in the road there are various strategies you can adopt:

• Adaptability – while it is difficult to predict what might go wrong with an individual project, the more experienced you are the easier this becomes to visualise. This enables you to mitigate against certain eventualities and build in some flexibility to help navigate these issues so that a project stays on budget or on time, and isn’t destabilised.
• Informed decisions – whenever you are faced with a difficult decision you will always benefit from getting good professional advice. A trusted and reliable source who has encountered these issues several times before will be able to calmly assess the situation and give you the best advice. Without this professional back-up you are likely to make a panicked decision which could make the problem worse and de-rail the entire project.
• Realistic ambitions – this roughly translates as ‘don’t over-stretch yourself’, so if you keep your ambitions realistic and manageable you should be able to navigate rough periods and obstacles without having to call a halt to the project.
• Stick to the original vision for the project – with most property development projects you need to take a long-term view, and if you carried out the initial feasibility study correctly and are managing the project correctly, a good idea remains a good idea even if you encounter some problems along the way. This could be called ‘holding your nerve’ and applies to most property investments, although of course you should seek professional advice on what to do in every case.
• Negotiation skills – in many cases a problem can be overcome if you have the ability to negotiate and compromise.
• Stick to the budget – your finances are always the most important element of a property development project and you retain the freedom to make decisions and adapt your project if you manage your finances correctly. So if you stick to your budget as closely as possible – and better still if you have built-in some contingency funds for just this type of scenario – a small delay or challenge shouldn’t stop you bringing your property development project to life.