Everyone would love to make tons of money while being creative and constructive. Real estate and property development have been on the rise for years now. There are always plenty of attractive options everywhere.
Chances are you’ve already looked into how to become a property developer. Well, the answer might surprise you, since it’s not as easy and only investing money and waiting.
If passive income is what you’re looking for, then being a property developer is not for you. You need to put in some serious elbow grease to ensure your projects go well. That said, it can be very lucrative for those with the grit to learn.
Check out our comprehensive guide if you want to know more.
Why Property Development?
There has been an increasing interest in developing property. This means knowing how to become a property developer and be great at it. Many parts of the developed world are showing a boom in the housing market, which opens the door to more apartments and homes.
Businesses opportunities are also expanding, especially in the tech space. This means more office spaces to invest in. When it comes to regions outside of the West, this is where the largest potential is.
There are even opportunities in South America and the Caribbean if you know where to look. Everything from resorts, malls, businesses, skyscrapers, and housing is in demand.
The costs can also be quite low and flexible depending on where you develop, making it easy to get into. Some countries in Asia offer great passive income potential without breaking the bank. Even with the pandemic, the demand for property development is on the rise, so there’s little reason to hold back if you can afford it.
Mastering the Basics
The first thing you have to do before becoming a property developer is learn the basics. Don’t jump in without the skill, knowledge, or capital you need. Some people have or can raise the capital, but you run the risk of wasting your money without the first two.
A good rule of thumb is to network. Get to know the right people and build connections in the industry. It isn’t a bad idea to work for or attach yourself to a local developer that can show you the ropes.
These connections don’t have to be working on multi-million dollar development projects either. Find people working on a smaller commercial or private development. Building new fast food or retail locations is a good start.
You’ll get first-hand knowledge and experience on the process and what’s involved. Everything from working with a client to managing the crews and all the organizational stuff in between. You’ll also understand how the contracts and financial side of things work.
Take the opportunity to network and build relationships with important people. You’ll come across people in the industry who can help you as investors or partners in future projects. When it’s time to jump in, assess your skills and risk factor.
There’s never any shame in starting small. Building up a track record will help you pitch your future ideas before settlement.
Size up the Competition
You can be certain that property development can be cutthroat. It’s lucrative and coveted, making it one of the most competitive careers. Before jumping into it, it’s necessary to know who you’re competing with.
This allows you to have a better chance of success with lower risks. If you’re a novice with limited experience, then it’s even more important. Depending on the approach you’re taking, you can learn from your competition.
If you’re only starting, it’s a good idea to build a clean track record. Even if you can raise funds for a mega-project, you won’t inspire the same level of confidence as established developers. If you fall flat on your face, it will tarnish your reputation, which can be difficult to recover from.
This goes for your finances as well as your reputation. Consider investing in something smaller. Renovation and rehabilitation projects are a good start. They give you some flexibility to be creative while giving you the starting bones to work with.
After a few of these projects go successfully, you’ll have built a good portfolio. This will make it easier to land more lucrative contracts where you can flex your skills. You may even attract the attention of your larger competitors, who may seek to headhunt you.
This will be a useful asset for you going forward. There are plenty of developer jobs available. That said, if you’ve learned all you can learn, move on or strike out on your own.
Understanding the Market
The market changes and shifts all the time. You hear talk of the housing bubble and how it might burst. While development opportunities look to be on the rise for some time to come, a sudden change is possible.
Housing or development demand can rollercoaster. It can be difficult to tell how long each dip and rise will last. If investing in a region with a strong track record and good opportunities, be eager but careful.
Never put all your eggs in one basket. Even in areas with political instability, there can be a window of opportunity. That said, diversify and be ready to lose your investment or see your project stalled.
Even the best developers run into development issues. It can take months or even years to restart a project if funds run out or things go south. There is comfort when you invest in projects that have government guarantees.
These, however, are hard to procure, and even when you do can still get stalled. Those same developing regions with fantastic opportunities can also carry plenty of risks. A good mix of steady but safe projects, along with more risky and lucrative ones, is a good idea.
If you aren’t able to work on multiple developments at a time, then switch between them. Use safer projects to build a financial reserve if your next mega-project has issues.
Learning How to Become a Property Developer
There is no simple answer for how to become a property developer. It takes lots of work, patient, knowledge, and skill. Money alone won’t cut it, as the ability to plan and organize effectively is something you need to learn.
If you need more advice or tips on getting into the development game, check out the rest of our site.