Residential property development in the Caribbean is quite rewarding and beautiful; whether you have roots in the Caribbean and now reside in Europe a piece of Caribbean real estate is always a fulfilling assist to own.
Property development can be described as encompassing activities that range from the renovation and re-lease of existing buildings to the purchase of raw land and the sale of improved land or parcels to others.
The Caribbean is what we would consider a holy grail for tourist as it relates to the natural feeling and sense of beauty of the landscape. These features have made the Caribbean the leading destination for honeymoons and retirees. If you are new to the development business you may consider taking a course to get a better understanding of the process and the whole business model of being a developer. A developer can be classified as an entrepreneur solving a particular problem. They are a few steps to accomplish when undergoing the development process.
Market Research - As any good business person you could consider to get out and get some research done on what you are thinking to develop and where, who are the current occupants of that area, who are the expected customers, what is the current demand, has any other developer did that type of development in that area, how did it perform,... those are the first questions you want to get answered before you even start thinking about land and construction.
Organize Development Team - At this stage you would need to start meeting with other professionals; talk to people like Engineers, Architects, Contractors and Property Lawyers. This step is important in the development process because you do not want to be rushing to look for these professionals when you really need one.
Finding Potential Properties - Finding property is sometime hard if you do not know the right
persons such as a Realtor, Driving around looking for a potential property can become overwhelming at times.
Conduct Initial due diligence - This process is actually engaging a design professional to do some site layout diagrams to really determine the site true capacity is.
Create Concept site plan to estimate site capacity
You want to have an idea of how much unit the land can actually hold, zoning and other site restriction should also be taken into consideration
Complete initial feasibility analysis - After creating the site plan you would have enough information to start putting some cost implementation to the proposed development and also calculate the returns. At the end of this you should see figures that will tell you whether it is profitable.
Yes or No Decision - The initial feasibility study is complete and the numbers will do the talking, this stage you will decide if you will go for the project or not.
Note: you have not purchase the property as yet, because you do not want to get tied up in a property that you cannot meet you expected profit margins, you may have to go through these process quite a few times before you are comfortable making an offer and start hiring other professionals.
Enter Property Negotiation - This is the point where you start to negotiate a deal with the seller, based to your initial feasibility study you will seek to stay within budget to stay profitable, as most property developer say the profit is when you actually buy the property not when you sell.
Begin Financing Process - At this stage you should start seeking financing for the development, private equity financing should be in place just in case you need back up funds due to unforeseen events. Hire development team - This is when you start to get things streamline as you seek to hire the team you already organized earlier in the development process, this process may vary from scope of work to review and contracts to sign. [if !supportLineBreakNewLine]
Conduct further due diligence & meet with agencies - You and your team will continue to do research and starting meeting with state agencies to conduct preliminary permit meeting to get information on any problem you may have and what are the various steps for the approval process for your project. Redo feasibility study - This is where you do further study of the property, revisit the site plan and make another decision whether the type of development is suitable for that area at that time. Meet contract requirements and move towards - As you get closer to begin the actual construction you need to make a few deposits and complete the contracting process.
Begin Permitting - At this point you have your Architect and Engineer on board; they are submitting nearly completed plans for the various types of building permit necessary. Acquire financing and close on Property - If this have not happen earlier now would be the best time to get all the financing required and start to close on the property, the later the better because you would have been in a better position to start construction immediately after acquiring the property. Complete permit process - After everything is in place you would receive the various approvals from the different agencies. Get construction bids - At this point you would start to receive final construction bids from contractors. Confirm market assumptions - Upon hiring the contractor you want to ensure that the need in the market is still present.
Complete final feasibility study - Putting together your final feasibility study, at this point you would have a detailed construction cost estimate to evaluate to ensure everything is in place because when you start the construction process the money that you spend can go up significantly.
Start construction - Start the actual construction process
Complete construction - Finish the Construction process.
[if !supportLineBreakNewLine]
When you start the actual construction process the only aim is to get out of the process with a successful project, so we need to pay attention to numbers and try to get things done on time and on budget, at this stage time is money and the money you spend can add up rapidly if not closely monitored. Receive revenue - At this stage you would start to get profit from the completed project whether you have sold units or keeping them as a rental income. Remove or Restructure financing - As soon as possible you need to pay off your all your loans because the interest can add up over time if you do not clear up the debt early.
8 Property Development Mistakes to Avoid