Like many different areas of investment, there is a temptation to overcomplicate property development and sometimes lose sight of your long-term goals. Before you can get started you need to decide on an investment strategy, a timeline and ultimately your long-term goals/profit targets. Targets are vital in focusing the mind and defining the actions you take. How can you tell how far you have travelled if there is no start point and no end point?
If you have no idea where, or how to start, John Howard can help you find the answer.
John Howard is known in the property industry simply as ‘The Property Expert’, and there is good reason for this title. His extensive career in property development has built him a reputation as a no-nonsense, straight-talking developer, with an impressive track record and a popular personality on the industry’s leading media (including TV). John has a very ‘keep it simple’ approach to getting started in property development.
“While I don’t wish to offend anyone (don’t forget, I’m a property developer myself), I’ll go so far as to say that, if someone is too much of an intellectual, they normally don’t make a great property person. This is because they tend to overanalyse everything and, as a result, they never get off the starting blocks.”
John advises that when it comes to choosing a property investment strategy, to stick to one you are passionate about.
There are many different types of property development/investment to consider including buy to let, redevelopments, commercial properties, student accommodation and more specialist areas. Even though your choice of property investment will depend upon funds available and timescales, it is important to choose an area of property development which genuinely interests you. This is the best way to stay focused and ultimately you will learn much quicker if you have a genuine interest in the subject. John goes into more detail about the different strategies in his book ‘Property Investment and Development for Newcomers’.
Whether full-time or part-time, property developers and investors come from all different walks of life. We often see builders switching full-time to property development rather than making money for other people. Then we have those with traditional jobs such as school teachers and the local postman, right through to estate agents and entrepreneurs who have sold businesses and are looking to get into the lucrative world of property.
In his book, John Howard emphasises the relevance of having the right personality type and experience to succeed. The stereotypical image of a property developer is one of fast cars and a high rolling lifestyle. In reality this could not be further from the truth. You will find that many highly successful property developers are cautious by nature, but they have an inner confidence and belief which means they are prepared to take the plunge when the right opportunity presents itself.
In the world of property development, it is not the quantity of investments you make but the quality which will ultimately decide whether you are successful or not. Luckily, it is possible to learn how to source and choose the best quality property developments in as little as 1 day with the right educational course.
Education has always been, and will always be, a key part of any developer or investor success. Property developers who stop learning and think they know it all, are the ones most at risk of failure. You will need to move with the times, change with the trends but remember; pride comes before a fall. It is true to say that success breeds success but it can also breed complacency and a huge ego!
John reiterates in his books and courses that profit margin is key. This might sound obvious, but it is very easy to get caught up with reality TV programs showing property developers acquiring homes for buttons, redeveloping them and then six months later selling them for hundreds of thousands of pounds. In reality, this is often not the case. Many property developers will work on profit margins of around 20%-25%. This kind of margin on just a few hundred thousand pounds can create a significant return, let alone those developments running into the millions of pounds.
Profit margins of around 20%-25% will give you a degree of headroom for unexpected costs or delays. Margins of less than 20% may wipe out your profits or drag you into a loss in the event of unforeseen expenses. As we touched on above, be ambitious, but be cautious, consider all investments available, but cherry pick those which fit best with your criteria. Quality over quantity…..
If you are looking to add value to a property, some types of property and some locations will have what is referred to as a “glass ceiling” when it comes to rental values and capital values. There is no point investing funds into an extra bedroom or a downstairs extension if the uplift in overall value is minimal. Some properties will offer opportunities to add value while others may already be towards the higher echelons of the local price bracket. Whether you are looking to invest £10,000 or £100,000 to add value to a property, there has to be an acceptable return for the risk.
John Howards delves into profit margins and adding value to property in much more details in his 1 day seminars across the UK. John passionately believes that 1 day of concise, fact-filled training is all you need to get a targeted, effective property development strategy in place. The feedback from his previous courses are testament to that.
In summary, we trust this article has given you food for thought with regards to property development strategies, personality traits, adding value, maintaining focus and long-term goals. The journey from relative novice to an experienced and successful property developer will be exciting, taking you on an emotional rollercoaster and no doubt creating mixed returns. It’s good to know that it’s possible to fast track your development journey (and get help avoiding common mistakes) by learning from industry experts like John Howard. You can read more about John Howard, The Property Expert here.