As evident from the name, this is the stage before the actual construction. Everything from finding the site to getting permits and finance falls under this broad category.
- The first step, of course, is to identify the site for the project. You need to find one that is viable, affordable and suitable for the type of development you are pursuing.
- The next step is to do enough your due diligence and find out everything you can about the site. Are there any ownership disputes, zoning restrictions or some other issues that can impede the development?
- Once the land has cleared these two hurdles, you need to do a feasibility study. List all the potential problems you may encounter, how to deal with them, and if you will make enough profit from the development.
- You also need to draw up a plan for financing the project through all stages.
- The most crucial step in this stage is getting all the required permits. Constructing without permits can have dire consequences. Your research should tell you about all the permits that are needed for the specific type of construction.
The pre-construction stage of any project is the one that carries the maximum risk. There are a lot of uncertainties involved. However, the risks come down significantly once you start the construction. At this stage, your main goal is, of course, constructing the property and bringing your dream to fruition. However, marketing the property, ensuring proper channels of financing and pre-leasing are equally important. This phase ends when you get the occupancy certificate.
It is a common misconception that the real-estate development lifecycle comes to an end once the construction is finished. But there is one last vital step. If you haven’t already leased or sold all units, then this is the time to amp up your marketing and pursue buyers actively. You should also have a financial strategy in place till the development achieves stability. If you aren’t planning on selling at the moment, you should have a clear holding strategy in place.
After all the hard work and planning, your vision has become a reality. Real-estate development is a strenuous yet, equally rewarding process. Following the steps mentioned above will ensure that you are doing it as per the rules and regulations. It is now time to sit back and enjoy the view. Or perhaps move on to the next project.