Many property investors dream of one day taking that next step to becoming property developers. The thought of taking a major project from inception, right through the finished product is very attractive. Both from a creative perspective but also from an economics point of view where property can be created at wholesale prices and either retained or sold for a profit.
But with over 2 million investors in Australia, why do so few ever make that step and even fewer actually make money? Today we are going to have a closer look at why most fail.
I have been involved with property for over 25 years. From investing right through to development. What I have noticed through my time is why most people fail to make that step across to development generally come down to 3 things:
Fear and lack of knowledge go hand in hand. Fear is a natural feeling that we get with anything that is new and we have no experience with. Whether it be a new type of sport, public speaking or property development. However, like everything else we have done in our lives, fear can be overcome by breaking down the process into small parts of what we need to do and getting familiar with each part of the process. That way you are not diving in too deep to start with.
Break down the process of development and work through each part of the process with some study examples. Finding the site, running the feasibility, looking at marketing channels etc.
A faster way to go is to find a mentor who has already been through that process. They can give you advice when you get stuck and make sure that you don’t fail into any traps that they may have done in the past. Having a mentor or a coach definitely accelerates the process of anything that you want to learn.
No access to funding is also a major barrier for most. There is really no easy way to get around this. Some solutions however will include, partnering with others, option arrangements or even private funding.
Be warned though. Property development is a risky game. Unlike just normal buy to hold investing, which is very safe, property development can cost you a lot of money if things go wrong.
