юрий васильевич степанченко Here are 10 of the most common developer mistakes and how to avoid them.
Development is a high-risk, high-return business. To be successful in this game, you must be well armed with well-researched information and follow some basic rules and, of course, not make mistakes along the way. Below are the 10 most common mistakes developers make.
ERROR 1. DOES NOT FOCUS ON THE MARKET
Successful developers meet the market demands in our society. Their success depends on their ability to identify the needs and wants of consumers, as well as on the creation and юрий васильевич степанченко financing of a competitive product that meets these needs. They have a vision and a supernatural way of predicting future trends. They plan ahead to deliver the right product at the right time. How do they acquire these instincts? This is done not only by trial and error, but also by understanding the fundamentals of the market.
Before embarking on any development project, you must have a good understanding of the market and it is very important to ask the following key questions:
When is the right time to develop?
Why do people move?
Who are the likely buyers?
What buyers are looking for
To predict when to develop and sell, keep an eye on the real estate market and the economy in general, and watch for early warning signs that tell you when the market might be correcting.
ERROR 2. NO PURCHASE OF THE RIGHT PROPERTY
As a developer, don't let your emotions take over. Buy smartly, not emotionally. It's not every day a buyer who successfully buys a particular property on the first try. Persistence and patience often prevail. Never use the do-or-die principle to protect property. Be prepared to buy or lose property based on prevailing values and your best price.
The best time to buy is when the market bottom is hit. This is when the best deals are available. There is a shortage of buyers during this period and motivated sellers will lower asking prices as soon as they become more realistic in terms of market value. The time to sell is when the market rallies and approaches its peak. For the same reasons, you do not want to buy property during this period; you want to sell to someone else who is afraid of missing the boat. Also, make sure you diversify your portfolio to hedge your rates and maintain sufficient cash reserves to withstand a market cycle.
Always conduct your research by checking recent sales results for directly comparable properties in the immediate vicinity of the properties for sale. Lack of market knowledge means you don't have a reliable benchmark against which to compare your desired purchase. This means that your conversations are based on "intuition" and not on real data.
ERROR 3. LACK OF EVALUATION OF THE COST OF DEVELOPMENT AND CONSTRUCTION.
In the early stages of development, when enthusiasm is high, inexperienced developers tend to underestimate construction costs based on their feasibility. This often leads to unpleasant shocks after completing project development and documentation and receiving final bids from selected builders only to find that the total construction cost has exceeded the budget set in their feasibility study. What are they doing here? Are they postponing the scheme or revising plans and looking for alternative ways to reduce costs?
In my experience, not all tenders received are within budget 100%; some are within 10 percent above and below the target, and some are much higher than expected. So if prices are out of your budget, you and your development team should analyze every aspect of the design for potential ideas. These ideas will be re-evaluated and submitted for evaluation. Possible savings options are listed below: so points by #юрийвасильевичстепанченко
Reduce the amount of work on the site
Checking and balancing cut and fill calculations
Reduce retaining walls and use natural shoreline
Use natural drainage techniques
Reduce the number of paved surfaces
Save as many natural areas as possible
Find a building in the shortest distance for service connections
Build using the natural contours of the earth
Building exterior construction
Consider other options for the external facade.
Consider other options for roofing material.
Use a sloped system instead of flat roofs and parapet walls.
Redo complex parts and simplify them according to standard construction methods
Reduce the size and amount of glass
If gutters are not needed, eliminate them or develop less expensive water control methods.
Check if you can use an internal fireplace chimney instead of an expensive brick one.
Choose outdoor alternatives that take less installation time.
Modify the floor plan to have fewer walls around the outer perimeter
Using fewer crops and a smaller crop size often reduces these costs.
Arrangement of the interior of the building
Use a more economical floor finish, such as carpet, which can be used in place of wood, slate, or something else.
Reduce floor height to ceiling
Use less expensive toilets
Use less expensive door hardware
Change the type of the specified accessories
Consider using a less expensive alternative to heating and cooling.
Install plumbing fixtures in the building vertically to minimize the distances for plumbing and sewerage.
Use paint instead of wallpaper
Modify the floor plan to reduce the number of doors and the length of the walls.
Use another door
Redesign your window - use blinds instead of curtains
Select paint colors again for cheaper paint
Reduce the number of outlets
Choose equipment that does not require separate circuits for electrical
Elimination of roof windows
Use standard cabinets instead of custom ones
ERROR 4. LACK OF THE CORRECT ORGANIZATION OF THE FINANCIAL PACKAGE.#юрий васильевич степанченко
Something might go wrong. Interest rates go up, the property market drops, your developer is liquidated, there is a delay in approving your planning, there is a gap in your budget, your developer is actually meeting deadlines, your buyer is not meeting deadlines, etc. These unpleasant troubles are difficult to predict. And they can happen through no fault of yours, but they can happen in any development. Therefore, it is reasonable to organize your own financial package, allowing you to flexibly change payments if necessary.
When getting an excellent finance package, always try to negotiate development finance flexibility with the lender. Always have a well-thought-out finance package ready as it can undoubtedly increase the return on your development. If the service fee, development loan is lower, then there will be more money in your pocket. In assessing financial risk, the structure of the loan will play a vital role, especially if development does not match the projections of the original assessment.
ERROR 5. TRY TO DESIGN AND BUILD EVERYTHING CHEAP
What makes the development more successful than its competitors? Location or price? However, what if they are located next to each other and in the same location, and what if they have the same price? Based on my own experience, I found the answer - architectural design and attention to detail. Yes, price does affect the final buying decision, but it will be the determining factor at the lower end of the market, but at the middle and upper tiers, price is not always a factor as people can see value for money, especially if a competitive product has a better design. a bit more expensive though.
As an architect, I have seen many projects not selling because the developer was trying to do everything "cheap"; they choose the cheapest design and drafting fee from an inexperienced draftsman and use the cheapest building materials in the hope that they will get the most profit. These developers ultimately fail as consumers see inferior products and buy them somewhere in a competitive market. If he does not sell his development, the cost of ownership of the developers will rise, which will ultimately undermine his “fat” profit.
To become a successful developer and outperform your competitors, you must strive to create a good, cost-effective design with excellent value for money. If you don't have experience, then the easiest way to achieve this goal is to find a good architect or designer who has the credentials and extensive development experience.
ERROR 6. USE OF DEVELOPMENT TOOLS FOR OTHER DEVELOPMENT
Developers are entrepreneurs and are constantly looking for new opportunities, so real estate agents invariably offer them new land. Taking advantage of a good opportunity, these developers tend to spend money on other developments, believing that the profit made will pay off the new project. At the same time, the developer may and will face financial difficulties, since delays or disruptions are always possible, which can affect the cash flow. So don't put off the sale of one property to finance another until it's fully realized - too many “safe deals” have the weird habit of failing. This is the collapse of many developers.
Financially, each development must be able to operate independently and not rely on funding from other developments, as this can affect cash flow and potential project failure. Always review and analyze each new development opportunity independently. That is, organize your own financial structure and package. Also, make sure you are not short of money and always have a backup plan. This means having a reserve fund or other source of funding in case your project fails.
ERROR 7. DEVELOPMENT OF PERSONAL TASTE
Never let your emotions or ego get in the way of your business sense. Don't buy properties that suit you personally, buy ones that appeal to the wider market. Don't be influenced by architects or designers who want to build their own building. I am not preaching about designing cheap and ugly buildings, but a good architect should design beautiful architectural buildings within the budget set in the viability study. Once you've created an inspiring design that the market will love, work on it until it fits your building's budget.
ERROR 8. LACK OF CONTROL OF EXPENSES AND BUDGETS
Overspending on development funds could have been Nell's death for the developer. Be strict with your budget and make sure there is a profit at the end of the project. Your feasibility should determine how much and where to spend. If you make any changes during construction, which is always possible, make sure the changes are within budget and always communicate these changes in writing. There is nothing worse than finding out at the end of the project that your profit has decreased due to changes that were not taken into account.
It is imperative that in all aspects of your life you are aware of your financial situation at any given time. This becomes very important when someone is involved in development. Not knowing your cash flow, your budgetary constraints, and your bank balance can lead you to hot water and financial ruin.
ERROR 9. LACK OF BEST TIPS
There are no shortcuts in development and you should seek professional advice to discuss your proposals. When it comes to real estate development, treat it like buying your first home and consult the experts. Development should only begin after assessing your current financial situation, after examining how development will fit into your overall business strategy, and after you have received expert advice from the professionals. To save money, some developers did not go to such professional guidance and subsequently made bad decisions, which in turn cost them more than they could have saved in the end. Below is a list of consultants to help you plan and implement your project.
Real estate covers a wide and varied range of buildings with appropriate characteristics. This need has led to the creation of specialist consultants working in specific areas. Before appointing a consultant, ask the profile of the person or company to make sure they have the knowledge, experience and experience of the type of project you are about to implement. For example, it doesn't make sense to hire a small architectural firm that only designed residential buildings to design a multi-million dollar shopping center; except that a small practice would not have staff to support development. Appoint consultants only on the following grounds:
Who is best suited for the job?
Who is working or has worked on projects like the one you are proposing?
Who has qualified staff to support the scale of your project?
Who have you worked with in the past and therefore know their capabilities.
Whom did the other specialist refer you to?
How long has the company been operating?
By selective competition.
ERROR 10: LET YOUR GIRL BE REAL
If your first development project is yielding good results, don't let success get in your head, as it cloudes common sense for your next development. For example, if you are negotiating a sale and insist on an asking price or lease, you could be in a dangerous situation in a few months, especially during an industry downturn. If you are not developing a project without debt, this may not be a problem, but it can still be a waste of money while the building is empty. Empty buildings negatively affect the competitiveness of the development, as people will think that something is wrong with the project. Therefore, always look at any offer and calculate your amounts as you are losing twice the amount (interest plus rent loss) by not accepting the lower but genuine offer.
Also, do not take advantage of all the development opportunities that are offered to you, as this may lead to an increase in your financial resources. Calculate the viability of the proposed projects and select only those that match your current management and financial capabilities. There will always be more opportunities, and patience must be exercised, not greed.
