I was never much of a reader when I started to develop property back in my 20′s but I did read a couple of books to help me figure things out. If I was to take a walk back in time, to say 1993 there’s probably a few thing’s I’d like to say to my younger self.
Get a plan
I started to develop property to get myself out of a rented apartment trap. I didn’t ever think I would become a developer and make a living out of developing property. But if I had thought ahead I would of done things a bit differently. I would of researched more and planned more. Of cource at the time I though looking through estate agents windows and giving them a call was enough. It wasn’t, I could have got to where I was going far quicker if I had planned every development with accuracy.
Don’t be impatient
Property development is not a get rich quick scam. It takes time and effort for every development you undertake. I’ve seen prices rise and fall, but if you take the meantime average property continues to rise at an amazing 8% growth. I worried needlessly, if I had done my homework I would have known this. You’re property assets will rise but it doesn’t happen over night. Be patient with you investments.
Keep focused on your property market
Everyday the media talk about what is happening in the property market. But the reality is there is a number of different property markets here in the UK. So when you hear of the average house price or the fact that mortgage approvals are down – this may not effect your market in anyway. London remained unaffected by the events of 2007. Foreign investor came in a brought up high yielding flats which kept the market boyant. So keep an eye on national trends by it’s your local market that will effect you most.
Zigg when others are zagging
When asked about his secret to investing warren Buffet replay ” I buy when others are selling”. It’s the same for property developers. When the market seem to be overpriced and everyone is buying and able to borrow you need to be cautious and, perhaps, when things look their worst you should consider buying.
The same can be said of where you buy. Look for the streets on the outside of the affluent areas. The road with the skips, the roads where the developers have yet to move into. The ‘ripple’ effect of property demand will ensure these street get their day.
Don’t ever go into Property Development
I was always talk by people that property development was foolish and could end up in tears. This advise was mainly given by those who had never tried. The truth is when you look at the risks of property development you would never do it. The market would never be right. You’d never have enough capital or knowledge. But at some point you need to take that step out side what you know and do something that’s that could make your life and outlook so much better. That takes courage but it also mean you can’t be too hard on yourself when you (and you will) make mistakes. Remember property growth has seen a rise of 8% – that’s a comforting thought when you need to hang onto a property for whatever reason.
Use finance to your advantage
It’s scary borrowing £100,000′s. But every Property Developer has to borrow. The smart ones use their debt to leverage their assets, to reduce their tax liability and increase their property portfolio. The greater your portfolio the more you can borrow and diversify.
Forget ‘Unemployment rates’
20 years ago ‘unemployment rates’ where a true indication of the state of the property market. However that indicator is no longer a viable benchmark. Decades of Government policy makers who have been obsessed with reducing unemployment statisics with various training programs and we’re left with no real accurate view of who works and who doesn’t. Again, look at you’re local market, see what’s selling and for what.
Don’t do it all yourself
I love getting my hands dirty, but nowadays my time is best spent looking out for the next deal. I’ve been very luck to have a great team of professionals around me, they’re skilled professionals who are focused at what they do – I could never be as good as them. It once took me 2 weekend to hang a door. The next property I asked my Carperenter who did it n 30 minutes. Whats the point? Whilst I might have a concpet for a plane for a remodeled flat and architect does this everyday. You need to leverage their experience.
Property Development isn’t construction
It’s a common mistake to think that property development is just about construction. It isn’t, construction is a stage in the property development lifecycle. So if you are a builder you won’t nessesserily be in a position to take on the role of developer.
Find your motivated sellers
We live in uncertain times and many people have been effected by what’s happeneing in the world. This doesn’t mean that everyone is a motivated seller, some still have genuine reasons for selling. But there are an increasing number of motivated sellers. From compnaies who invested in property to individuals who want to reduce their portfolio. They are out there, the auctions are fuller that I can remember and despite what people say there is still plenty on the market. The key is to understand the position of the vendor beofre you invest too much time.