Contact us at: info @ reimag. co. za + 27 21 761 3848
Don’ t be afraid to ask as many questions as you need to, especially the very hard ones, and don’ t make any assumptions. Educate and empower yourself with as much information as possible.
My experience is that you will find a consistency in the answer to the questions you ask about the different aspects of property development. That should be your guideline and benchmark. If there is too much inconsistency and conflicting answers, you don’ t have the answers yet. Keep asking and investigating- the devil is in the detail. Overlooking a simple aspect could cost you the success of the development. You want this to be your first development, not the last.
Start small
Don’ t be in a hurry to dive into a 100-unit development that you think is going to be a home run and put you on the cover of a magazine. More often than not, this does not happen on your first development. Start off with something small and manageable, from a capital outlay as well as manageability perspective.
Making a mistake on a two-unit development is a lot more palatable than on a 100-unit development. Remember that the mistake is in multiples of the number of units you are developing. One small item overlooked, at a measly cost of R5000 multiplied by 100, is all of a sudden not so small. But at two units, it’ s difficult to swallow, but manageable. It becomes school fees paid, and not bankruptcy.
Market segment
Choose a market segment that you are familiar with. If you’ ve been investing in affordable housing or student accommodation for years, don’ t embark on an ultra luxury development as your first development.
Start off within a segment of the market that you already have knowledge in. Very often, first time developers make the mistake of venturing into a segment that they are not familiar with, and try to apply the principles of one segment in another. This is a recipe for disaster. Find a segment of property development where there’ s insatiable demand, and consistently offer a product at a very specific price point. Once you’ ve perfected developing in a specific segment, improve on your product offering, rinse and repeat.
Geographical area
Develop in an area that is situated close to you, or within an area that you are currently invested in. Property development has 20 times more moving parts to manage than managing an existing asset that only requires a bit of maintenance and rent collection.
Not only do you need to consistently be on top of the contractor and the construction process and all the trades and sub trades, but also the day-to-day overseeing of the progress, quality control, liaising and coordinating the professional team, managing the budget, and many unforeseen challenges on site, which almost always occur.
Having a development far from your location, can prove to be quite onerous and eventually an absolute nightmare when you have to commute for hours or board a flight just to get to site. Sometimes, site visits may be necessary more than once or twice a day.
The above can be summarised in one word: focus. Focus on knowledge, the market, product, demand, and geography.
Wishing you success on your property development journey.
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Contact us at: info @ reimag. co. za + 27 21 761 3848