The number one question people ask me about getting into property development is, “Do I need any experience?” With the right knowledge, tools and support, the answer is no.
Your success will also depend on your mindset. If you believe you can and have the right amount of persistence and determination, I’m confident you’ll succeed in property development.
It’s important though to know when to go ahead with a project and when to walk away. All successful property developers and investors will agree that you make money when you buy, not when you sell. Take time to understand this very basic but important point. Once you understand it, you’ll realise the power of proper planning and the importance of due diligence.
Good development opportunities don’t rely on or assume that what is expected to happen will happen. Make sure due diligence has been conducted so well that an opportunity to profit presents itself in nearly every circumstance.
Successful developers look at a project and its potential profits realistically. The important word here is realistically – that’s the difference between a good and a great property developer.
Many people mistakenly believe that putting your money in real estate is risk-free. They make up figures to make themselves feel better, and then make decisions based on those figures, which were false to begin with. This will result in an experience gain but probably not a financial one. This is fine if you’re a beginner, but my advice is to search for developments that will allow you to learn AND earn on the same project.
Your decision not to go ahead with a deal is just as important, if not more important, as the decision to go ahead. Resisting temptation is a strength, although it’s important not to confuse it with procrastination.
I’ve helped many people realise that the project they once set out to develop was not at all suitable for their situation. I also find many people compare their Chapter 1 to someone else’s Chapter 20. They want what everyone else has, without doing what everyone else has done. This only leads to confusion and less motivation to continue.
Something that many will not tell you is that most successful property developers have formed a strategy that suits them personally. They know the type of development they prefer and are usually experts in their field who don’t divert from this area. They stick to what they know best and have developed a proven system that they use again and again – something I like to call the rinse and repeat method.
It’s important to find a development and follow a strategy that suits you personally. No two people or situations are the same. Property development is about personal preference that ties in with your current financial position. Growth is measured by your financial position, and as your financial ability grows, so too do your opportunities.
It’s also important to develop an exit strategy. If things shift or the market changes direction, you must be able to maintain the holding cost for your development for a prolonged period. For inexperienced property developers, this often happens unexpectedly. Experienced developers, however, will have allowed for this in the planning stage.
This is where I see many people come unstuck. They project the future sale of the property and mentally spend the money before it comes in, assuming and somehow convincing themselves that they’ll achieve the results they want. Once the market has changed direction and they have no way of keeping up with the ongoing repayments, which don’t stop for anyone, they are put in a position where they have to sell.
We all know when we’re desperate, we JUST WANT OUT! This is where novice developers have bad experiences and lose interest in continuing as property developers. Being aware of this is a key point to becoming a great property developer: never put yourself in a position where you have to sell.