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Property Development: 101 Plus - Part 3

Brynley Little and Richard Little of Your Land Partner continue their series of articles

Successful developers invest time, effort and money to understand the fundamentals of the business; Process, People, Product and (Market)Place. These fundamentals form a solid foundation in which to build a low risk, high reward property development business that can have a positive impact to many.

Stage 2 of the property development lifecycle is one of the most impostnant parts to the whole process. In last months article we shared with you the first 3 levels of the appraisal process and in this article we are rounding things off with level 4 – The Full Development Appraisal.

We’ve now reached the business end of the appraisal process, the Full Development Appraisal.

A Full Development Appraisal, as the name suggests, is an in-depth analysis of the development opportunities that have filtered through the early stages of the appraisal process. We take in a detailed look into 9 different areas to establish whether to move forward with a formal offer/proposal.

We refer to the 9 areas as the 9 Pillars, as they provide the strength to your appraisal.

The 9 Pillars are;
1. Demand
2. Scheme Design
3. Planning
4. Legals
5. Construction
6. Funding
7. Costs
8. Deal Structure
9. Exit

Demand – What demand is there for certain unit types in the area? We see it all too often; inexperienced developers opt for blocks of apartments in areas where there
is already an oversupply of that unit type. Just because one particular scheme creates the most amounts of units, or highest GDV doesn’t mean it is the optimum scheme for the site. A good quality estate agent is worth their weight in gold, engage them early in the process and get the inside track on what units are selling and renting well, and their thoughts on realistic sales values and timescales.

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