2 Things that will make you money in property development
There are only two things that will make you money in Property Development - Innovation & Marketing - everything else is a cost.
Transcription
There are only two things in property development that will make you money. And everything else in between is a cost. And the two things are innovation and marketing. What do I mean by innovation?
Innovation could be in the way you structure deals. Innovation could be in a way where the way you get your finance. Innovation could be in the way you negotiate your terms.
And innovation could be in the way you design your stock, the one that you want to sell. In finance, it is the way you get your finance, the way you get your funding. It could be set up in so many different ways.
It could be a JV with the landowner, it could be a JV with the builder, and it could be JV with the money partner. And you’ve gotta really be very creative in all of this. And the only way you can be creative in all of this is if you know all the rules if you know all the strategies if you know how the mechanics of these deals work.
You can innovate in finance, you can innovate the way you structure your deals. I know that there are some really innovative ways to structure deals. The third thing is terms and conditions. You could basically ask for anything and negotiate anything. So it all boils down to you being innovative enough to be able to negotiate the kind of terms that are the most favourable to you.
For example, no matter what I do, I always, even if I buy something with plans and permits, make sure that I’ve bought enough time so that I can go out and sell my project before I settle so that I can save on insurance.
And number four, the way you can be innovative is the way you design everything. It could be something that is very environmentally sustainable or something that’s green, something that’s got solar. The reason I say marketing is because you’ve gotta really make something that you can sell.
If you’ve drawn something that you can’t sell, it’s gonna be a problem towards the end of your project. Because the only time you actually get your money back is when you actually sell your stock. And marketing, my friends, is very different from just engaging an agent.
And the reason for that is the lenders and the banks are actually getting stricter and stricter of demand before you sell what they want, the amount they want to cover before they can let you start construction. Marketing comes in a lot earlier than it used to.
And when it comes in early, that means you gotta have, you gotta sell everything off the plan, and imagine you going out and buying something off the plan which has not been built, and you gotta be really, really certain about so many different things. You gotta make sure that you’ve got a good builder, you gotta make sure that you’ve got favourable terms.
But if the product is good, everything boils down to the actual product. So, can they actually see the floor plan?
Can they actually see what it’s gonna look like? Are the renders good? I mean, of course, you can go and really get some cheap renders done from overseas, but are they gonna do justice to the product that you are selling?
I’ve tried to cut corners when I started and said, “yeah, no problem, I will go overseas, and get some really cheap renders done,” but in this industry, you basically get what you pay for.
So if you are paying, offering peanuts, you’ll get monkeys. Just make sure that the kind of product that you are selling, if you’re selling something for $200,000 dollars, I’d say, “Okay, don’t bother with the render,” because, you know?
It doesn’t work. But anything above 500 and above 600k that you want to sell as your product toward the end of it, or you went off the plan, you want to make sure you’ve got some really good renders. Because it is difficult for people who are getting in, and buying your stuff, they won’t be able to visualise it.
So they really have to see what it looks like. And marketing involves materials and finishes. Those are the two things that will make you money. Everything else in the middle of your property development project is gonna be a cost.
And if you can really nail the two ends, this is the front end, and then the back end and the front end is innovation and creativity, and the back end is marketing, making sure that everything that you’re developing is sellable, you’ll be a good developer. And guys, I almost forgot to mention this, but don’t forget to comment, share, and like. Thanks very much. Bye.