- What exactly does a real property developer do?
- Why should you become a property developer?
- Will real property development be a good fit for me?
- What are the dangers?
- How to Become a Real property Developer
- Know your escape strategy and plan.
- Determine your financial situation.
- Do your research.
- Understand your intended audience.
- Purchase wisely.
- Create a vision.
Development of real property. We’ve all seen it done with ease on television, but is it really as easy as they make it appear? Will you be happy as a property developer? And, assuming it does, how does one go about becoming a property developer? Everything will be revealed in this post!
But, before we get into the specifics of how to develop a Cyprus property, let’s first go over what it takes to become a property developer in Cyprus.
What exactly does a real property developer do?
A property developer is simply someone who earns a career by developing new property or remodelling existing properties to resell for a profit. It’s simple enough.
Why should you become a property developer?
Despite the national press’s doom and gloom regarding the status of the housing market, the truth remains that the country requires additional houses. Much more. It is virtually unimportant whether this takes the shape of new construction dwellings, houses converted into flats, or just making better use of existing space. What counts is that people require housing, and the purchasing public (as well as tenants) are getting more picky with each passing year. All of this implies that being a property developer may be both financially and emotionally gratifying.
Another significant advantage is that almost anybody can develop property. Sure, there is a financial barrier for some, but there is nothing prohibiting you from obtaining official certifications and training.
Will real property development be a good fit for me?
While no credentials are required for property development, it is prudent to put yourself to the test before embarking on your path as a property developer. Some important questions to ask oneself include:
- How do you handle money?
- Can you communicate well with a variety of people?
- Can you work under duress?
- Are you interested in business?
- What is your level of apprehension when it comes to taking risks?
Be truthful in your responses to these questions, since it may come back to bite you if you don’t.
What are the dangers?
The final of the questions above is generally the one that distinguishes those who want to from those who should. Property development may be a dangerous industry, so be aware of this before diving in headfirst.
There are several factors that might work against you, including:
- Changes in interest rates
- Cost of construction rises (both parts and labour)
- Expensive legal squabbles
- Changes in the real property market or the overall economy
- New restrictions are going into effect.
- Work is halted for extended periods of time due to inclement weather.
- Making errors (It does happen! From overpaying for a home to investing in sections of the property that will not improve its total worth)
There are, of course, methods to reduce the risks involved with property development, but it will never be a risk-free endeavour. Even simple improvements take time, and the longer things take, the more likely it is that things will go against you.
Having said that, the advantages for individuals who opt to develop property may be substantial. You just need to be aware that, contrary to what TV producers would have you believe, developing property is not the same as having your very own money tree in the backyard.
How to Become a Real property Developer
So you’ve taken our brief test, seen the risks, and still believe that property development is the correct career path for you. Great! It’s time to go a little more into how to become a property developer.
Know your escape strategy and plan.
When it comes to developing property, instead of starting at the beginning, it is always a good idea to start at the finish. What exactly do we mean by that? Simply said, you must know exactly what you want from your new development before you begin. That way, you’ll be completely aware of the pathways you’ll need to follow to reach your ultimate objective.
Before you begin, you should ask yourself two essential questions:
- Will the property be sold or rented after it is finished?
- Do you want to construct from scratch or buy a “fixer-upper”?
Knowing these two elements will help you to design your escape strategy as well as the path you must take to get there.
Make a business strategy.
After you’ve completed the preceding tasks, it’s time to develop a property business strategy. Working backwards from the two responses to the questions above will allow you to build your development business strategy. Be precise, and break down those big goals as much as possible.
You’ll need to cover the following in your business plan, which is required even if you’re fixing up a property as a side project rather than a full-time business:
- Analysis of the strengths, weaknesses, opportunities, and threats (Strengths, Weaknesses, Opportunities, Threats)
- Market investigation
- How will you finance the venture?
- What your expected returns are
- Who is a part of the project? (effectively, your company structure)
- How you want to purchase the property or land
- What is your development strategy?
- How will you locate contractors?
- Who will be in charge of the administrative side of things?
- How you intend to manage sales and marketing
- Your plan of exit
Determine your financial situation.
After you have a good business strategy in place, you can proceed to the next step: securing finance for your idea. There are several options available to you, some more realistic than others, but the most frequent are:
Bridging loan – For people who require cash while waiting for funds from another source.
Unsecured loan – Personal loans can be utilised for minor home improvements, but borrow prudently.
Secured loan – Useful if you need a significant financial infusion, but it may be costly and puts your property at risk if you fail to make repayments.
Residential mortgages are ideal for people who want to live in the property they are building.
Buy-to-let mortgage – For individuals who want to rent out their property after it is completed.
Commercial mortgage – This is the funding option to choose if your endeavour will result in commercial property, such as restaurants or stores.
Do your research.
This is something that anybody buying a property should do, but it is especially important for developers. Some places are more conducive to development than others, and some may have possibilities just around the corner that may significantly increase their value if you enter at the proper moment (think Crossrail as a prime example).
Doing your study, however, does not end with analysing the region and determining your core demographics. It’s also a good idea to learn about conservation areas, local government regulations, and anything else that could get in the way of your ultimate aim.
Understand your intended audience.
This links in both your ultimate objective and the research you will have done on the region you intend to buy in, and it is critical that you get this portion of your strategy just right. Knowing your target audience will help you to develop your property for them, attracting the right individuals when the time comes to sell or rent out your new development.
Another advantage of knowing who you plan to sell your property to after it is finished is that you will be able to correctly estimate the expenditures involved. Remember that you are not altering the property for yourself, but for people who fall inside the demographic analysis you conducted.
Your ability to acquire wisely, as apparent as it may appear, will make or destroy your property development firm. Many people incorrectly believe that the most essential aspect is development, but buying at the appropriate price is what will truly benefit you.
Another thing that novice developers frequently get caught up in is the flurry of activity. Juggling more tasks than you can handle may be exciting in the short term, but it is a recipe for disaster in the long run. Make the most of what you have and don’t be scared to wait if the right chance isn’t there when you need it. It will come, but you must be present to take advantage of it when it does.
Taking needless chances may result in you never having that opportunity again, therefore don’t do it!
Create a vision.
When looking for property to invest in for development, it is critical that you:
- Understand your ultimate aim.
- Have a clear picture of how you intend to make it happen.
The simplest approach for anyone developing real property to reach their end aim is to add value to the property they are purchasing. Again, this may appear apparent, but it is a talent that should not be underestimated.
Hone your ability to recognise chances to add value by seeing a variety of homes and determining exactly what you might do to add additional worth to that particular home. Would a loft conversion be beneficial? Is there any available land for construction? Is it preferable to demolish it and start over? Is it possible to turn this home into apartments?
The questions you may ask are virtually limitless, but in order to be a successful property developer, you must ask the correct ones at the appropriate time.