If you’re like most people, you’ll have had the dream at one of two key times. Either you have just sold your property and made a small fortune, despite the fact you did very little work on the property when you owned it. Or you’ve been watching one of the very popular TV property shows, where a couple of amateurs have blown their budget, made a series of basic mistakes, yet still made a small fortune.
Yes, life as a property developer seems romantic and probably better than the daily slog you currently face at work.
Yet there can be few occupations as risky as being a property developer. Where else would you be asked to invest tens of thousands of dollars into a project, dedicate months of hard work and only then find out if you had made a profit? Even running your own business isn’t that risky, as you can measure your profitability along the way.
Property Development Is Work
The reality is that it’s quite hard to make it as a full-time property developer. The money you made on the sale of your last house may have come from the growth of the housing market while you owned it. That’s not something you can rely on as your main source of income.
And as a property developer, you are reliant on being able to turn enough of a profit from property to cover your living expenses for a few months, plus help to fund your next purchase.
So before you quit your job and start scouring local estate agents’ windows for suitable houses to do up, here are a few things to think about.
Taking The Right Risks
First off – are you suited to do this? Many of us are risk-averse; that’s why we like going to work and getting a regular salary. It makes it easier to live your life knowing you have that monthly income.
Being a property developer means the end of regular income (unless you decide to rent your properties out, anyway). And the financial risks are higher. If you can’t sell a property you’ve just finished, that’s not only going to stop you feeding your family, but will make it hard for you to move onto the next project. This is not an insurmountable problem, but an issue you should consider before leaping.
The next thing is to look at the marketplace you are going to develop for. Look around your local area and try to work out where the greatest demand for the property lies. Are there a lot of commuters wanting a well-connected area or a virtually new property? Wealthy executives demanding four bedroomed detached houses? Families wanting lots of space for very little money? Retired people who want low maintenance bungalows within walking distance of shops?
Find the demand and develop for it. Try not to get hung up on the developer’s dream. If you want to create the perfect home, then do it on your own. Keep your development as a business.
Once you’ve done your targeting, it’s time to do some hard work. You should be prepared to do as many unskilled laboring jobs in your projects as you can. In fact, to be a successful property developer you should be prepared to learn how to do the things you currently can’t. It’s a key attribute that will help you maximize your profits. Just remember to get qualified people in for the skilled work.
And the final part is to do whatever it takes to get a quick sale at the right price. It’s the goal you’ve been working towards all along.
Still like the sound of being a property developer? Then good luck, and enjoy your new life!