How to become a successful real estate developer
Real estate investment and development has never been a more popular hobby or career change challenge; If you want to learn seven secrets to consistently and successfully investing in real estate throughout development, or if you want to know how you can continue to profit from property, even if the market takes a downturn, keep reading…
1) Do your location homework – Did you know that through successful and sustained location research, professional real estate investors continue to profit during a market downturn? It’s true – regardless of market conditions, you can apply your location research approach to your real estate investments and make consistent profits from the property too.
Take the time to learn all about a town or city you are considering for your next real estate development purchase and find out where the emerging areas of that town are likely to be. If there are downtown redevelopment projects planned, look at the real estate market in the immediate vicinity, if there are areas that are booming right now, look at the immediate neighboring areas for their future price increase potential, for example .
Don’t follow the crowd: Have the confidence to buck the trend and get ahead of the curve by positioning yourself in a market that is about to grow rather than one that has already flourished.
2) Know what you can afford – While it can be profitable to speculate at times, never be tempted to jeopardize your own home. Calculate your finances and be ruthlessly strict about what you can and cannot pay for a down payment, for mortgage costs, and for renovation and remodeling of your next real estate investment. Only proceed within the limits of your strictly allotted budget and don’t be tempted to overextend yourself, especially if competition in the real estate market is tough and the market is slow or stagnant.
3) Identify your target market – Having identified your next location for real estate investment, identify the types of people who buy renovated properties in that location. Know who your target market will be and what they are likely to look for in a property in that location. If, for example, you’re looking at downtown spaces, you may identify that your buyers will be young single professionals and that the ideal type of property for these people will be low-maintenance luxury apartments – look for suitable properties with the potential for redevelopment in luxury low maintenance apartments and you will meet your target market instructions… look for large homes with sizable yards in the area and you will have completely missed the market and possibly created a property that will not sell!
4) Renovation, not reconstruction – Know your budget limits and your personal skill constraints. Do not consider purchasing a property that needs a complete structural overhaul when your budget is tight or you do not have the time, skills or inclination to do the structural work yourself. Be realistic about what you and your budget can accomplish, and look for properties that fit that summary. Pay to have a full independent survey carried out on any property you are seriously considering purchasing before making a down payment to ensure there are no hidden surprises waiting under the floorboards to eat away at your budget.
5) Manage your budget – With your survey in hand, you can approach builders to get quotes and look up prices for fixtures, fittings, finishes and furniture. Take the quoted and obtained prices and build your budget. Consider ongoing mortgage and service costs and labor costs, as well as your findings and structure, and allocate your money accordingly. Keep an eye on every expense and be ruthlessly strict with yourself and your builder. If possible, get your builder to commit to a contract with fixed completion dates and fees and keep track of every penny or cent every day. At the end of each week, tally up your spending and expenses and make sure you don’t go over your budget. If you’re spending too much, contract it or you’ll have to remove it from other areas of development. Remember to never skimp and save on finishing touches and always have a realistic backup fund in case of emergencies.
6) Appeal to the wider market – Forget putting your personal stamp on any property you develop – YOU won’t be living on the property! You should have already identified your target market, which will give you a good idea of the level and quality of finish expected, now meet those expectations without adding your own personal taste to the equation. By appealing to the broadest market or lowest common denominator, your property will be attractive to the majority of buyers, making it quicker and easier to sell and profit.
7) Make friends with a real estate agent – Your greatest ally when developing a property will be your real estate agent. Make friends with these guys and you will build a beautiful and successful symbiotic relationship where both of you will benefit the most! Real estate agents are an untapped source of knowledge about the local market, who is looking for what property in what area, what extra features cost little to add but drive up the sales price, and what a buyer of your type of property expects in particular. Get the facts from your real estate agent, and then apply his advice. You will create a property that they can market for the best price and in the widest market: you will make more profit and they will earn a higher commission, which guarantees a beautiful and lasting friendship.
Finally, remember that when you’ve bought, renovated and sold, you’ll be looking for the next property opportunity and any real estate agent you’ve worked well with will be on the hunt for the right real estate for your next investment. any subsequent purchases are much easier to obtain.