Basic Fundamentals - The Property Developers Pentagon

Firstly you need to Identify suitable opportunities such as underused land and buildings. Then you need to do a Feasibility Assessment. What can you do on your development site?  Can you chop off a part of the land and build a house on it, if so what are your costs and your potential profits? Your cost is going to be things like getting planning permission, doing the build, your agent and legal fees. Your profit will be determined by what’s the end value of the units you’re going to sell will be worth less the cost of the land and all your build cost. 

The next part of the property development pentagon is Control. Generally what comes in most people’s mind is they need to buy a land but why do you want to buy the land if you don’t know if you are going to get planning or you are not sure what you want to do with it. That’s where the Property Control Agreement also is known as Option Agreements comes in. They are a vital agreement to making a lot of money very quickly with minimal risk.

Next is Planning, there are various stages of planning. You can start on what is called a pre-application, which is the cheapest way of getting to sit in front of a planning officer with some architectural drawings and getting their view whether they will grant your planning. After that, you can go to a full planning application, and if you don’t get approved, you can either change of plan or go to appeal.

The final part is the Revenue Realisation Strategy if you’ve got planning, let’s say for building a house in someone’s garden. Then you decide if you build it by yourself or do you bring in to join venture partner or do you need to borrow money?