With knowledge of the housing market, commercial or residential, a skilled team and loyal clients, property development and management professionals get an opportunity to see their visions turn into properties clients rent or buy for their homes and businesses. While the work is rewarding, they are many challenges property development and management professionals face along the way.
Licensing, Regulations and Permits
Just like any other small business, property development and management companies must register as legal entities within the state where they are established. Depending on the state and the nature of the project, a property development and management business owner may also have to apply for licensing and permits in accordance with regulations, which may present challenges such as delayed projects, going over budget and even losing projects.
Budgeting and Financing
Securing funding for projects can be problematic for development and management companies for various reasons, including having too much open credit to apply for more, getting denied for loans, needing a co-signer for applications or banks not willing to lend money because of downturns in the economy. When property development and management companies face these types of situations, they may have to end or delay a project if they cannot find alternate sources of funding. Owners of property development and management companies have strict budgets they must operate within for each project they undertake. While initial estimates for jobs may appear to fall within a given budget, problems can arise which cause the company to go over the budget.
Identifying Locations and Properties
Developing properties is a gamble, so owners spend substantial time researching locations and properties before they decide to take on projects. Through their research, they discover how much growth a neighborhood may experience, the types of businesses in the area and the values of the homes. Developers often rely on information from outside sources, such as real estate agents and appraisers.
Hiring Contractors and Staff
Property development and management companies have to decide whether to hire a staff or work with contractors to complete their development projects. The cost to hire employees can be too high for smaller companies, causing them to opt for contractors. In either case, they have to manage workers to ensure that jobs are completed on time and on budget.
Finding Renters or Buyers
Once a development is ready to rent or buy, property development and management companies have to go through the process of marketing their projects to clients. When managing a rental property, they have to collect payments from the tenants on time, handle any service requests and ensure that they follow all residential and commercial property laws.
