02 Sep ✔ You have to do it in the right order AND be careful
When it comes to making a success of property development it’s not a bad idea to get yourself educated first. “What a silly comment Bob” I can hear you thinking in your head “it’s so obvious”.
I couldn’t agree more, but it’s often the ‘obvious’ things that bring some people unstuck. You’ve heard the saying “A little bit of knowledge is dangerous”. To me, that’s even worse than no knowledge at all.
Most people who know nothing know they know nothing. So they realise they have to learn something. Others, armed with some knowledge (but never enough), let their egos tell them that they know enough – and there lies the danger.
Even some, who realise they need to know more, aren’t prepared to invest properly in their education. They think they can it learn off the internet, or latch onto someone who has done a deal or two – possibly in a rising market where all their mistakes were masked by the market. Good luck with that.
If you were writhing on the ground with an appendix about to burst, would you jump on Gumtree or Air Tasker and ask for quotes? Maybe you could find an unemployed abattoir worker from the boning room who would have a go at removing your appendix for a carton of Carlton Draught.
Think of all the medical expenses you’d save.
Or would you prefer someone who did six years to get a medical degree, three years as an intern in a hospital, became a surgeon and has performed 67 appendectomies? I bet you wouldn’t be concerned about the cost, but much more concerned about the experience of the person wielding the scalpel. (I’d want a damn good anesthetist too).
I’ve seen my share of property development corpses in the last 35 years. Or people lying bruised and battered in the gutter because they didn’t know what they didn’t know. Some I could save; others had simply lost too much blood for me to revive.
One lucky escapee attended one of my 3-day workshops some years ago. He was in the process of buying a site to take 10 townhouses and was due to go unconditional in 3 days.
In one of the breaks, he came up to tell me about his good fortune. Fortunately, I asked him to show me his numbers then wham! Two seconds in I could see his build cost was about two thirds what it should be. A quick adjustment and the site value plummeted towards zero.
Apparently, the build cost came from a tradie mate of his – a painter or plasterer. Another life saved by good luck. I definitely saved him money, probably his marriage, and years of financial pain.
So, what did he do wrong?
- He started a development BEFORE he educated himself.
- Took advice from the wrong source.
- Chose to build in a low socioeconomic area which rarely works.
How about you? Have you invested enough in your property education? Do you go for highly experienced experts for advice? If not, I hope you have a big first-aid kit with plenty of pain killers and bandages.
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