Investments in property, just like every other line of business are filled with its own share of risks and pitfalls. In an ideal world everything will be perfect. People will always be honest, proposals will always be followed through, partners will be discreet and there will be no need to read the small prints.
However, life, and this business is anything but perfect.
It is your job to navigate through all the murky waters, avoiding the grey paths to find a lasting model of success.
Good news: It is possible.
At least provided you are armed with all the relevant information needed to excel. Which is why this piece is a must read for not just the aspiring property developers but also for the experienced and well “developed” developers.
We will discuss the three things you must do to ensure higher rates of success and two things you must avoid by all means.
Top 3 Tips for Property Developers
Establish what works will increase value most in the property:
So you have this property in a hot location. The very first thing to do will be to inspect, renovate and locate the best buyer in order to get it off the market as soon as possible. Right?
In this business, there is a thin, fine line separating the amateur developers from the successful ones. Thin. So thin that it takes a great deal of attention to detail to recognise.
And here comes the line: Value.
There is a school of thought that the only 3 magic words that everyone should bother to memorise is Location, location, location!
But really, they meant to say that location determines and drives everything, especially price. It is well meaning advice, but is a bit too generic.
Your job as a developer is to replace one of those ‘locations’ with VALUE.
After all, what is the benefit of a well located property if it’s completely wrong for your target market? Would a bungalow in SW1 provide the best value to you or your buyer? Would a 15 storey apartment building be appropriate in Framlington, Suffolk?
What do you need to add to the property to greatly enhance its value? The good thing about value is, just like beauty, it is in the eyes of the beholder. Study your market properly and get to know your prospective clients. What do they value most? What boxes do they need ticking?
Sometimes, it will be an improved kitchen or perhaps an extra bathroom/bedroom, maybe some off road parking. Different buyers in different markets will value different things. So it’s up to you to figure out what is the biggest driver, and make sure you’re fulfilling that demand as best you can.
Let this be your motto: “I will know my target market so well that I will always strive to give them value”
Get at least 2 Quotes from builders
Now you know what works need to be carried out. Now you are thinking beyond replacing and repainting randomly to make it look like it should be in a magazine. But unless you want to become a labouring builder, there are things you cannot just do by yourself. You will have to instruct and contract with builders.
This is where it gets complicated for most developers. It is true, some builders come straight from hell. You cannot just seem to figure them out.
But check this out: You do not have to rely on one for quotes and estimations. Speak to at least two or better still 3, to get their temperature and the bigger, better picture of what needs to be done with prices. And oh yes, refuse to be buried in the tech-no-vibe. Ask questions. Be thorough. And please no assumptions.
Refurbish the Property to the Right Level
You are doing great. You know what needs to be done. You have found the right person or company to do it. Now, stop.
Before you commit to doing anything at all, revisit all the ideas and data you got while studying the market and your prospective clients. Remember, you have already done a thorough job of knowing them and their expectations and needs. Now, lets put all that into good use.
Ask yourself again, what does the market really needs? What do they want? And what do they expect in a property?
The reason for this is simple: If you over-deliver, then you end up losing.
You may win the client and close the deal, but when the ink dries from the contract, you are left feeling like pinching yourself, wondering if you could have gotten more. DO not let that be you.
Remember, a fine line separates and makes the difference.
Thankfully your research will come to good use here. Know what is being expected from you and do it. Just that.
Those are really the 3 things you must do as a property developer besides learning the 3 magic words. But what about those things to avoid?
Top 3 Tips for Property Developers to Avoid:
Do not pay a builder on a day rate
Most builders will not want this. They would instead prefer to take their time and build according to their pace and time-table. Good. But with only one problem: It burns money from your pocket.
Let it be known upfront what you need to get done. Make sure everyone understands, gets the picture and are on the same page. Then ask for the estimated cost, from start to finish. Never agree to the “Pay me every-day and we will see how this goes” idea that builders love to sell. That is one of the reasons to get at least 2 of them. Experienced ones should know what needs to be done and how much it takes. And oh, also get an estimated timeframe.
Do not assume everything will go to plan and budget
Lastly, this is where we get realistic. It is good to have the expected budget in mind, the changes to be made sorted and the required time, on paper. But again remember, this is still not a perfect world.
Shit does and will happen.
So in order not to be constantly worried and stressed out, give yourself a little margin of safety for the inevitable changes that will come along. Expect that there will be overruns in your plans and in your budget. Expect and prepare for them accordingly.
This way, you will not be caught unawares and left stranded.
Here’s to your success….Happy development!