Careful costing of a property development is key to ensuring your project stays on time and on budget, but even the most experienced builders, property developers and landlords know that it takes just a few bumps in the road to throw these straight out the window.
That’s why, when arranging development finance its common that a lender will expect you to include an extra sum as contingency. It’s normally a significant figure in the region of 10%, and it is likely you will run through it. According to UK Construction Online less than one in three projects completes within 10% of its original budget.
If your budget ends up falling short, there’s no need to panic. There are usually additional development finance options a specialist can offer. If you need to discuss your funding options or just need some advice from, give us a call on 01489 346788.
The sooner you talk to us, the better your chances of getting the build back on track.
What can make a property development run out of funds?
You get blindsided by unexpected issues
You’ve brought in an experienced quantity surveyor to manage your materials and your project was carefully costed, so what could go wrong?
Even with a New Build, where the cost of constructing the property should be accurate down to the final roof tile you can run into problems before you even get started.
The groundwork can throw all sorts of spanners in the works. Before the work begins a full ground investigation must be carried out to identify any problems that could impact the finished development such as subsidence.
If something crops up, you could be in for months of delays and added costs already.
When it comes to conversions and renovations the chances of you running into issues is even higher.
For starters, you could discover any kind of structural deformity that wasn’t picked up in the survey that will quickly chew through your time and funds. Walls need underpinning, pipes need relaying, asbestos, dry rot, the previous owner papered over dodgy DIY… the list is endless.
You underestimate the costs
Estimating a new build accurately can make the difference between a profit and a loss. A good estimator is worth their weight in gold, so your best bet is to bring in a professional. There will be countless ‘little things’ that you forget to factor in if you have limited experience and those little things add up to push you well over budget.
The cost of materials and supplies can be difficult to predict given the fact their prices can fluctuate drastically between the time you make the estimate to when the project actually kicks off, especially in periods of high volatility.
Get your prices and quantities locked in with your suppliers to ensure they can fulfil your order on time. Your workers not being able to crack on with a new build because they’re waiting on orders will eat away at your profits.