Proper prior planning and other important ‘P’ words

As my career marches beyond 35 years I can reflect on many clients who have achieved great success as developers and investors and, unfortunately, I have also witnessed a numberfew whose wheels have fallen off.

Success as a property developer takes many ingredients – passion, persistence, positivity and a willingness to take a few calculated risks. The most important attribute of the successful property developer is the ability to master every aspect of project management.

Just as a building must have sturdy foundations, it is essential that you start your project management with putting in place the fundamentals of the project or its foundations – what, where, when, how and why. It is my strong recommendation that you lay those project management foundations before, not after, you approach a finance broker for assistance with project funding.

The more project planning you complete before even considering funding, the better chance you will have of securing the funding you need. Does that sound a bit around the wrong way? Wouldn’t it be logical to go to a finance broker first and make sure you can borrow what you need before you put any effort into planning?

The simple answer to that question is no. Before a finance broker can assist you to find and structure the best funding solution for your project, you will need to be able to give comprehensive answers to many questions.?

Where will the project be located and why have you chosen that location? Do you know that there is strong demand for that type of project in that location? What is the unimproved value of the land and how are you going to pay for it? How much will you need to borrow for the initial land acquisition? Does your actual development project need funding and what are the specifics of that funding?

What is the likelihood that you will get statutory approval for the project? Have you had pre-development application discussions with the consent authority (council, planning panel of government authority). Do you have investors or partners? Do you have any capital or equity to invest? What is your timeframe and who are your target purchasers?

The more information you put before me as your finance broker, the better I will be able to deliver the package you need. The more you are able to showcase your expertise as a project manager, the more confident I will be of your ability to deliver the finished project and that will give me the confidence to approach lenders and investors on your behalf.

Another characteristic that I have seen underpin the success of developers is having an open mind and a willingness to look “outside the square” to find solutions even if they don’t seem conventional at the time. If I told you, for example, that it is possible to fund 100 per cent of your project, what would your initial reaction be? If I told you that I can introduce equity partners for your project &/or simplify your selling process of your finished units, wWould you reject the proposition outright or would you want to know more?

To find out more about Acuity’s 100 per cent Funding Facility and tell me about your next project, call 02 9489 0609 or email [email protected]?