What to Choose in a Property Development Partner

Property development can be a lucrative and satisfying investment opportunity. Whether it’s your first property development project or you’re a seasoned developer, working with a property development partner is an effective way to increase the opportunities available to you, while reducing your risk.

What is a property development partner?

Property development simply means the creation or enhancement of buildings to make a profit. A property development partner is an individual or entity that you collaborate with when you undertake your development.

Taking on a partner allows you to pool resources, expertise and capital so that you can share the responsibilities and profits involved in the project.

Definition and role in development projects

The role that a property development partner plays in a development depends on the specifics of the project and what is required.

Some property development partners provide capital while others provide investment property advice. In other scenarios, one partner may own the land while the other wants to develop it.

It makes sense to choose a development partner with complementary skills to your own, whether your skills lie in the practical, like feasibility studies and sourcing profitable sites, or the design process. If you are new to property developing, choosing a partner with experience who can offer property development advice is a huge advantage.

What is the difference between a builder, a developer and a development partner?

While the terms builder, developer and development partner seem to be largely interchangeable, there are key differences between a developer and a builder.

A developer takes a leading role in any development, coordinating the whole property development process. Their responsibilities will typically include finding and securing the land to develop, organising planning and approvals, overseeing the project, including budget and timeline, before handling the marketing and sales of the completed project.

A development partner is likely to split some of these responsibilities as part of a joint venture.

In contrast, a builder is only responsible for constructing the building itself. They are in charge of site management and construction (as well as sourcing materials and equipment) but they are a hired professional, employed to deliver the physical structure.

Key qualities to look for in a property development partner

It pays to take the same careful approach to finding a property development partner as you would to choose a home builder. Take the time to do your research and don’t be afraid to ask searching questions.

Experience and track record

Check their experience and track record as part of your due diligence to make sure their values and goals align with your own. You could ask them to provide a reference, or whether you can speak to previous clients that they’ve worked with.

Online reviews and word of mouth also have a part to play here in determining what kind of approach a developer takes, and whether it will suit you.

Financial stability

Ensuring your proposed property development partner is financially stable should be a key part of your due diligence. Capital can be locked in for a lengthy duration so you want to make sure your partner has the financials to absorb this.

Communication and project management skills

Communication and project management skills are also vital. There are lots of moving parts in property development. You will need to work with many different entities, including contractors, local councils, utilities, neighbours and so on. An effective property developer knows how to get on with all of these parties, as well as how to plan and execute a project as efficiently as possible.

Local market knowledge

Local property market knowledge is a real asset in a property development partner. Working with a partner who knows the local market means they will understand the specific processes better than an outsider. They will have built an understanding of the area’s characteristics as well as the governmental forces at place. They may also have built a reputation which means their projects receive priority.

Red flags to avoid

Just as there are several things to look for in a development partner, there are some red flags to avoid.

Requires large upfront payments

Any development partner who asks for a large upfront payment is to be avoided. This is an equal development not a Ponzi scheme.

Vague timelines and cost breakdowns

While some timing specifics will be determined by the specifics of the project, an effective project manager should be able to provide you with firm timelines and cost breakdowns.

Neglects feasibility studies

Conducting a feasibility study to assess the quality of the project and its likely outcome is one of the most important stages of a development.

Spending money at the outset to work out whether your project is viable will definitely save you money in the long run.

The property development process: What to expect

The property development process has many stages, including pre-development, gaining permits and approvals, pre-construction and tendering, construction and completion.

Timeline and key milestones

Setting out a clear timeline with key milestones defined is a great way to approach the process. This allows you to have a picture of how the development is going to go, and creates some deadlines and goals to work towards during the process.

Your role vs. partner's responsibilities

It’s also worth setting down who is responsible for what at the start of the process. This clarity will pay dividends in case of any dispute and should also forge a more transparent working environment and a smoother, more efficient property development.

Why choose Novus Projects as your development partner

Novus Projects is an experienced commercial property developer, with over 30 years of industry experience. We enjoy forming strong partnerships with our clients and we have a nuanced understanding of every stage of property development, from practical to financial, so we can take the lead through the entire process.