Questions To Ask a Property Developer
The real estate industry is one of the oldest and most profitable across the globe. Property development is essential because many people require properties for residential or commercial purposes. So, it is necessary to contact a property developer to acquire the type of building or land you want. Here we will discuss about the important questions to ask your property developer.
Who Is A Property Developer?
It is important that we understand who a property developer is, before we proceed. Property developers are entrepreneurs who carry out real estate development. A developer adds value to land or property and extracts a profit from such an event. The idea of developing property to its highest and best use value is crucial to the property development process.
Below are the questions to ask a property developer.
- Ask if the developer renders property management services
It is essential to ask your property developer if they provide property management services as it’s a crucial element of a stable investment and ensures peace of mind. Property managers are responsible for rent collection, finding new tenants, dealing with maintenance queries, and more. The obligations that come with the ownership of a property are endless, and you need a reliable person to handle such duties.
Before investing in a private or commercial property, always check you are dealing with a developer that is dedicated to their investors’ interest, as it’s an essential factor when considering your financial future.
- Ask for how they came up with the projected the return on investment
Return on investment is one of the critical points to consider for property investors. It’s crucial to ask property developers how they came up with their projected high rates of return and what evidence in the market is available to support their claim. Developers with viable projects can provide you with accurate figures on the area in question. For instance, details such as the average asking rent per month and the average price per square foot of a property are important to know. But ensure that expenses such as management costs, tax, lettings fees, mortgage payments and service charges are included in your Return on Investment projection. Some developers ignore these costs to make their offering look more profitable. Always ask for a comprehensive breakdown of the property investment to know your rate of return fully.
- Ask if the project have planning permission
Planning permission is another critical question to ask your property developer about. It’s crucial to confirm whether a project has received proper planning permission from the local council before making the first deposit on a property. This is to avoid cases where investors are advised to withdraw from a contract after exchange have been made. This means investors will eventually lose their deposit, ranging from 20-30% of the property’s value. Therefore, always ensure the project has undergone all necessary planning permission measures, and the accompanying proof is provided before you make a decision that will determine your financial future.
- Ask if you can get discount on the property
One of the questions to ask a property developer is the discount available on the properties. Developers offer price discounts on a sale because most of the properties are overpriced so that buyers can bargain. It is believed that price discounts are favourable to the investor. Meanwhile, it represents an overpriced property. If you are want to buy a property and are considering certain developers in the market, our tip would be to request for discounts from their sales agent to see their reply. Most trustworthy developers who offer premium products at fair market value would immediately dismiss any questions on discounts.
- Ask if you can obtain mortgage on the property
One of the most important questions to ask a property developer is whether or not the property satisfies the lenders/bank requirements for a mortgage.
For instance, a unit of property in development may be subject to down valuation if it is overpriced. This means that majority of banks might lend a lesser amount than was earlier estimated when the purchaser committed initially to the purchase.
Basic market research usually shows the correct market price, but well-recognized developers will always offer investments valued at the prevailing market rate. Down valuations typically occur when a property developer has no completed stock nor appropriate experience in that market, so do ensure that your developer already has a portfolio in your chosen market before investing.
- Ask if your initial deposit is protected
It is the most important questions to ask a property developer is to know if your deposit is safeguarded if something goes wrong. All lawfully registered developments have procedures in place to protect the deposits of investors should any problem arise.
Proper scrutiny from investors is required, so make sure the contract offered by the developer specifies that the deposit you pay is secured by an independent warranty provider that is acknowledged by the Council of Mortgage Lenders. The independent warranty provider will either step in to repay your deposit or complete the development if it runs into difficulty.
- Ask if the developer has a proven track record of delivering projects
It is crucial to ask developers about their proven track records of delivering projects. It’s necessary to know the number of projects a developer has developed, the location of the project, and when it was completed. You get the required information because it is difficult for developers to hide the list of projects that have been completed and handed over to their investors in recent years. A proven track record lets investors see if the developer is an accomplished authority figure on the marketplace they operate in, plus it’s necessary to understand the quality of the finished product and know whether investors have seen a return on their capital outlay in past developments. Be careful with those who claim to have a substantial portfolio, as they may be sales agents acting as the project developer. That is why this is one of the questions to ask a property developer.
- Ask if you can sell the property before completion
Sometimes things can change, and you may require urgent cash as an investor. Therefore, it’s essential to know whether you can sell the property before completion should you need to do so. Many property developers will allow you to sell your property before it is complete. However, it would be best if you used a solicitor who is experienced in an off-plan property.
The solicitor will make sure that the contract is flexible enough for you, and thoroughly explain all the terms and conditions attached before you sign the agreement. Some developers even put investors in touch with solicitors who are professional regarding off-plan property contracts. This is to assure investors are well aware of their rights and enables a much smoother process during the legal phase of the property purchase. That is why this is one of the questions to ask a property developer.
The questions to ask a property developer discussed above will allow you to find the best property developer for your investments.