When you become involved with property development there are many benefits to look forward to. Obviously, the profits can be wonderful ,however that is only one great aspect of becoming a property developer. Once you’ve completed a development project it can make it easier to finance, and furthermore you will gain leverage. There are also tax benefits that include nice returns and security as long as your investment is in a prime real estate area.
With that said, there are a multitude of mistakes that individuals new to the property development process can make when they are starting out. Many people believe that becoming a property developer is simply about buying property and then selling it for an enormous profit. It isn’t quite that simple. There is loads of information you should know before even considering getting involved with development.
If you hope to see success it is absolutely vital to have a solid understanding of technical and financial information. It is also important to be able to communicate well and hone your marketing and sales skills. Often times new developers will jump into a project without doing enough research and end up with more than a few regrets. To ensure that you don’t end up making a few of the worst errors that amateur developers often do, avoid a few key things when beginning in the development world.
First, do not buy in the wrong area. It is a very basic rule but it’s one that is often broken. Someone new to developing will believe that they have found the “next up-and-coming” area, and even though it’s not very nice they think that it’s an investment that will reward them in the long run. In all reality, finding great development opportunities is not as common as many people believe. Whether there aren’t any transport options, too many busy roads, or tons of crime, bad areas will always end up selling at a discount. Being able to buy a property relatively cheap does not mean that you’ll be able to turn it around for a profit and if you’re borrowing to do so it can make the situation even worse.
Secondly, if you’ve bought your first property and are looking to begin work make sure that you’ve thoroughly researched the builders you’re hiring. Get references from past clients and before allowing any renovation to begin have them sign a fixed price contract. It is easy to lose money when the build of your property takes longer than you expected.
A few other things to keep in mind and avoid doing are obvious, however, are commonly made mistakes by people new to property development. Don’t let your own personal taste influence things because it can alienate buyers, you want to give people a blank canvas so they can imagine their own ideas in the space. Do not scrimp on quality even if it is tempting. When amateurs try to mimic other developers, but at a lower standard potential buyers will notice. Avoid cutting corners, but at the same time, don’t go overboard. The ideal is a fresh, clean finish without anything over the top.
Overall, educate yourself on what it takes to be successful in property development. Talk to professionals and never rush into anything, no matter how good it sounds. Keep your paperwork in order and avoid greed. Property development is a fantastic way to make money, as long as you know what you’re doing.