Property Developer is a broad term applied to everyone from individuals who buy a single property and add value, at one end of the market, to large corporate house-builders at the other. The most successful developers we’ve worked with, and some are at the smaller project end, have one thing in common. They all have a very clear plan that has these questions answered. It’s fair to say that pretty much everyone has some knowledge of property, we all live and work in it, but property development, at any scale, is a commercial venture and the following three questions will help you frame how you approach it. They don’t exist in isolation, they’re all intertwined, but you do need to be clear on each.
- How much time do you have?
- How much knowledge do you have?
- How much money do you have?
To be clear, I’ve put these in order of importance and this is why. Time – From the moment that the thought ‘I’m going to develop property’ springs into your mind, time will define what happens next and will continue to do so all the way through the journey. If you’re awash with time you can learn and develop your knowledge or skills. You can spend time researching, viewing and understanding market, scale, location… If you time is limited, then you need to know that from the off. It isn’t necessarily a restriction to your ambition, but it will define many aspects of what comes next.
Knowledge – This, without doubt, needs to be plentiful but proportionate to the scale of the project you’re embarking on, that said, you don’t need to know everything yourself. What you do need to know is what you do well, what skills do you contribute to the project. Be clear on this and you’ll start to see what other seats need to be filled on your project team. Without getting all Donald Rumsfeld on you here, you know what you know and that’s great, but what don’t you know? What ever form that advisors take, you need to be confident that they have the knowledge and experience to know what’s missing.
That’s the start of you project team, however large or small, and this will give you the confidence to move forward.
Money – I’ve placed this third because I’m looking at it in the context of the whole project. How much money you have access to can, along-side time and knowledge, determine the scale of project you take on. That said, depending on your ambition, it doesn’t have to be that linear. Many developers only use their own capital to fund planning gain, with option agreements, joint ventures, flips and investor funding making up everything else.
There are of course risks here but that’s you job as a developer, identifying, managing and mitigating risk. How you approach this is down to you.
In our experience, these three questions are key. Answering these will define the type of developer you are. Knowing this shapes everything including the support you need so we always make sure I clients are clear and we provide them with the right service.
ps. knowing this will shape the sort of developer you are and, guess what, in our experience, there are three types of developer. The power of three 🙂 but we’ll come on to that in our next article.