Property development is an exciting process – but it’s also one that requires you to put some work in ahead of time. The goal of that is to mitigate potential risks later on. With that in mind, what follows are the three core principles of due diligence in property development that you should be aware of.
By far, one of the most important principles of due diligence in property development has to do with the financial aspect of the project you’re embarking on. Simply put, how are you going to finance all the development that is to take place? If you’re planning to take on new debt in order to do so, for example, you’ll want to bring your lenders into the conversation as early on in the process as you can.
Once a site has been selected, you’ll also want to address the area where things are most likely to stall later on. Most of the time that is the legal aspect. What permits do you need? Is the area zoned in a way that is appropriate for your purposes? These are the types of questions that need to be answered before you even think about breaking ground.
Finally, you’ll want to consider the environmental aspect of the site you’ve selected. This includes not only local wildlife (including any potentially endangered species) but also things like restrictions that there may be on tree cutting. Plus there is the composition of the soil, bodies of water that may be in the area, and more. All of these are things that could impact your project significantly, which is why it’s best to address them now.
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