The very first thing that you must do is to start thinking like a developer. It is vital to always remind yourself that you are running a business, not buying a home for yourself.
Don’t ever think of the property as ‘yours’. It’s not.
It is a business proposition and, as with any business, if you do not make a profit then there will be no money to develop another property and therefore you have no business. This is the number one pitfall of all investors just starting out as property developers. They get emotionally attached to the property and personalise it rather than remain detached from the property.
That doesn’t mean that you can’t get enjoyment from the project. If you don’t actually enjoy the process of buying, developing and selling, you are unlikely to succeed. As with any business you must get each part of that process right if you want to stand any chance of making a profit.
Always remember that your property is simply a product. Develop it for a particular market and be objective- its not going to be yours in the long run. Keep in mind your end product.
Create a realistic budget and stick to it. Don’t be tempted to make expensive, unnecessary changes that won’t add to its final value. You will be amazed at how many new property developers lose a huge chunk of their profits adding features that do not increase the value of the property. Property management companies Naples FL suggest that only conduct minimum improvement. Hence, you should focus more on developing the necessary areas of the property so you won’t spend huge amount of money.
Organisation is essential and it is so easy to do. I recommend that you buy a filing system. I use a concertina pocket system or you could use box files.
Keep records of absolutely everything. This would include what you have researched, everyone you have contacted and their quotes. These records can be invaluable to refer to for future developments. Make sure you keep a clear set of accounts for yourself and your accountant. Believe me, it will save you many headaches in the future.
Do Your Math
It is imperative that you do your research and find out whether the property you are interested in can actually make you money. Be realistic about the costs of all the work involved and also set aside a contingency sum. Property development has a nasty of habit of catching you by surprise taking you over budget. Modernising an older building is an uncertain business and problems will arise along the way. Do not delude yourself into thinking that just because a property requires modernisation there is profit in modernising it.
Seek Professional Advice
Don’t be afraid to ask the experts. They have training and experience and their advice can prevent you from making expensive and time-consuming mistakes. From the initial purchase to the planning and developing, professional advise can be invaluable. I have saved myself thousands just by seeking professional advice.
Unless you are very experienced in general building work, it may end up being more expensive to try and do the work yourself than to pay an experienced workforce to do it for you. I have seen many projects go way over budget and over schedule because the developers thought that they could do the work cheaper themselves. It is false economy and it can delay you from getting on with your next project.
Thinking It Through
Property development is a huge investment, not just financially but also on your time and effort.
Before you commit yourself have you thought about why you are considering such an undertaking? Think long and hard before you make the final decision to go ahead and buy a property for development. Check that you are doing this for the right reasons. It is imperative that you think it through to make sure you can cope with the financial, organisational, design and labour aspects before you begin.
Taking on the first property project can be a high-risk business and it may even be stressful, time-consuming and a catalogue of crises. However, if you do your homework and are realistic about the project you are undertaking it can also be one of the most rewarding and profitable things that you will ever do.