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How to Become a Property Developer
3 pieces of advice for anybody new to property development
So you’re dreaming about becoming a property developer, your intentions maybe to build skyscapers and change the world, Or just looking to turn a profit on a small refurbishment project?
Whatever your reason or ambitions for wanting to get into property development, below I share 3 pieces of advice you should consider before making the leap of faith!
What is property development?
First, before sharing my 3 pieces of advice, I would like to make very clear what property development is from an investment point of view, just so we are singing off the same hymn sheet.
Successful property development in its simplest form is the following:
Buy land or property + develop, gain planning permission or renovate it + sell it for more than what your total outgoings are = total profit.
Easy, right? Well, the practicality is a little more difficult than that, but the fundamentals are still the same. If you are reading this post to achieve the above, here are my 3 pieces of advice:
3 pieces of advice
1/ Find the Right Team
A great mentor of mine once said to me, ‘Your job as a developer is to bring all the pieces of the jigsaw puzzle together. Eventually, with your guidance, they will create the final picture.’
In other words, the resources you need to excel as a property developer are in front of you right now; all you have to do is go and find the right people and resources and put them all together.
Whatever your experience is currently, property development is all about finding the right team of people that will help you excel. With these people on your side you can overcome any obstacle.
Here are just a few common examples:
You don’t know how to find and appraise a site = find a mentor.
You don’t have the money = find an investor.
You have no construction experience = find a good builder who can guide you.
You don’t know what financing is available for developers = work with a good broker.
You don’t know if you can get planning permission on a site = work with a planning expert.
The list could go on and on. Pulling in the right people as you need them is going to be key to your success. If you are just starting out, the first step is finding a great mentor that can teach you the ropes from scratch and also help you bring in the right team and resources more quickly. Click here to see my 3 tips to finding a great property developer mentor.
2/ Plan Your Finances
Unlike most other products which you could buy for cheap and the very same day sell for more and make a profit (such as a car purchase, for example), property development purchasing and selling requires a lot of legal paperwork, which takes time.
What this means is that even if you were able to find a site or project today, by the time you’ve bought it, added value to it and then sold it, it could be a minimum of 6 months, if not more, before you earn income from it. In most cases, the bigger the profit, the longer the waiting time before it reaches fruition!
For this reason it is important to have steady income to cover this time deficit. Whether this be from a job, money you’ve saved, or an investor, it is important you do the maths, and in my opinion plan for a minimum of 12 months before expecting to gain income from your property development. Otherwise you will fail before you start!
If you are starting out with no job or money at all, perhaps it is worthwhile to create a business plan and approach a few people for start-up capital, where you input the time and they input any amounts of necessary funding for a return in future profits. Click here to see my 3 Ways To Find A Joint Venture Partner
Some things you may have to fork out when starting are:
- Lead generation (for example, phone bills), property owner searches agent fees
- Professional fees (for example, architects) and planning application fees
- Survey fees
- Broker fees
The list goes on. You do the maths and have the necessary money to succeed.
3/ Be Mentally Prepared
There will be times when lending gets pulled, vendors don’t accept your offer and sales get down-valued. It is a frustrating game, and there will be hiccups along the way. Therefore, above all, be patient, persistent, determined and don’t stop until you achieve your goal.
Your mindset is going to determine if you make it or not!
I wish you all the best in your property development journey. If I could be of assistance along the way, please get in touch.
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