Many people want to try developing property because they believe they can get rich quickly without doing a lot of work. Developing property isn't easy. Without the proper experience and knowledge, it is easy to fail in this risky business. In fact, there are five reasons according to Ateeya Manzoor first time property developers lose money.
Location is Everything
Many first time property developers don't do research to see which areas are growing and which areas are not desirable. First time developers often look for great deals without thinking about where the properties are that they're purchasing. Property can be cheaper in run-down areas or locations that buyers consider inferior to others. If a developer chooses the wrong location, he can stand to lose money. No buyer is going to want to buy in the wrong location even if the property looks great.
Watch the Budget
An experienced property developer knows that before you purchase a property, you need to do your math to see how much a property costs and how much money it will take to renovate or build on the property. An experienced property develop will know actual costs for materials and labor, and will budget extra money for unforeseen problems. Most first time developers aren't sure how much renovations and building materials cost, and they forget to budget for those extra expenses that occur. They lose money by going over budget.
Most property developers have to hire workers to complete jobs on the properties. An experienced developer knows how long it should take workers to complete jobs and is there to supervise the workers to make sure the job is getting done quickly. Some first time developers leave workers to do the job without supervision. When the job isn't completed as quickly as it should be, the developer loses money by paying the workers for extra hours.
Hiring Inexperienced Workers
Some first time developers try to save money by hiring inexperienced workers for a cheap rate. This doesn't work because sometimes the developer will have to call in a more experienced worker to fix the mistakes of someone else when the work won't pass inspection. Developers lose money by paying for the same job twice.
Time is Money
A first time developer must have a clear timeline for a project, so it can be sold quickly. If the timeline fails or isn't clear, the developer will lose money because of his indecisiveness
Planning ahead for these issues, can save a first time property developer a lot of stress and money. Money can be made if foresight is used.
Ms. Ateeya Manzoor is the Managing Director of Mayfair Management Group.
Ateeya is a skilled strategic and risk manager with over 20 years of experience, 12 of which have been at the executive level. Through her 20+ year career spanning Bay Street and Main Street, she has worked on projects in the technology, legal, hospitality, property development, engineering, oil and gas and professional development industries.
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