Harwood Homes


Why inexperienced property developers get it wrong

Why inexperienced property developers get it wrong & how to avoid costly mistakes

Our Top 5 tips on how to avoid costly mistakes when doing small scale property development.

  1. Not having enough cash available

‘Failing to plan ahead with your tradespeople and materials well ahead of time…will always help a development run smoothly”

How often do you see building sites that sit around that sit around without anybody working on them for weeks, months and sometimes years at a time?

Often, it’s because the developer has run out of money or the project has overrun causing problems with cash flow.  Being able to properly estimate how much things cost, and having a carefully considered budget is an important skill in property development.  Any project budget should also have an amount set aside for contingencies, in case there are hidden costs that can’t be foreseen prior to starting a development.

  • 2. Plan ahead.

Many cost overruns are caused by the length of time the project can take.  Failing to plan ahead with tradespeople and materials booked well ahead of time, having them lined up ready to go when they are needed will always help a development run smoothly.  Knowing how long it takes for concrete to harden or a kitchen to be installed is important to cost control.  Having a development site empty for weeks or months on end with no tradespeople showing up is very problematic to your projects’ profitability.  It’s hard to get quality tradespeople, booking them early and looking after them is critical.

Getting the best result for your property development
  • 3. Research the market conditions and predicting movements

Many developers are selling their product 12 months or two years after the project has begun.  This means that they have to have as clear a picture as possible how the market is going to move.  Is what they are building going to sell in 18 months’ time? What kind of house do people want to live in, in that location?  They may have built units where the demand is for 3 bedroomed houses or vice versa.  Knowing the local market demand based on thorough research is crucial to a profit and therefore the projects’ success.

  • 4. Hire the right trades people

Hiring the wrong tradesman is another mistake commonly seen.  This can lead to work not being completed to current building standards or working in a way which compromises health and safety.  Equally importantly, it can lead to poor quality work which needs to be redone adding costs and delays in moving the project forward.  It’s also important to check that the tradesmen have got experience in the type of work you are hiring them for, that they hold the right licenses to complete the work competently, and that they are properly insured. 

  • 5, Have Exit strategies
5 reasons inexperienced property developers get it wrong

Sometimes, even the best laid plans can go wrong.  No project is without some problem or other.  Hopefully the problem is easily solved, but a good property developer will have considered what will happen if things don’t go according to plan.  They will have factored in possible delays or bigger problems and have a contingency plan, often referred to as an exit strategy in case of problems with the project.  Good property developers are able to be solution focussed and either solve the problem or change the strategy.  Many will have 2 or 3 exit strategies they’ve carefully considered, and be ready to action if things don’t go quite as they’d hoped and planned for.

Developing property is challenging, yet very rewarding.  Done correctly the outcomes can be pretty cool.

Happy developing.


Noarlunga property development

Nicola & Mark, property developers of Port Noarlunga, pride themselves on being professional with a down to earth, honest approach to property development. They understand that homes are a place of love and deciding to sell or develop a property can be a very emotional time.