Property development is a unique career that stands far apart from other real estate verticals. While many people are aware of the term and its meaning, few if any truly understand its current function.
Many property development myths have made their way into the public sphere, the worst passed from one website to another in an unhelpful game of telephone. These myths have simplified property development to the point of total inaccuracy, which may be confusing to new learners just looking to get started.
If you’re interested in the field of property development but not sure what to expect, it would be best to abate common myths today and leave room for accurate information tomorrow. Here are five of the most egregious myths regarding property development, as well as the realities of the industry, tempered advice, and suggestions on where to learn more.
There is a lot more to property development than meets the eye — certainly more than the myths would have you believe.
Let’s sift fact from fiction through these five common myths, exploring the realities of property development from a bird’s-eye perspective.
1. Property development is easy
Buying properties, building structures, and selling space sounds easy enough on paper. However, the reality is that development is not for the faint of heart.
The average property developer balances a host of varying talents and skills to complete projects effectively. These include:
- Project management. Good developers must be able to keep a finger on the pulse throughout the development process.
- Financial management. Great budgeting skills are a must-have in this ever-changing industry.
- Construction knowledge. Some information about practical, hands-on construction work is helpful during the final phases of development.
To be a good property developer, you must be willing to work hard and acquire the necessary skills to get started.
2. Property development is always profitable
Not every development project will make you millions of dollars. Truthfully, few ever will.
Many first-time developers and inexperienced individuals spend more than necessary on completing their projects, cutting into overall profits and reducing their income potential. Coupled with yearly inflation, last-minute changes, and unexpected snafus, the income you make from development may be more modest than you think.
Property development is a long-term investment rather than a get-rich-quick scheme. The sooner you realize this, the most successful you will be over the long run.
3. Property development requires you to be rich
Many people outside the industry view property development as a rich man’s game. After all, it takes capital to make capital, and when you consider all the drawbacks and possibilities, it seems impossible for others to get in on the game.
However, this is far from reality. Property development is achievable by people of every income and background, even those with less experience in real estate as a whole. There is no price range required to get started, as a myriad of financing opportunities are more than enough to support a small-scale project.
That isn’t to say money isn’t a critical factor in successful property development. You will likely feel more secure about your investments with additional savings in place, and should be careful not to bite off more than you can chew.
4. Property development is extremely high risk
Some real estate development projects walk a fine line between iffy and downright dangerous. However, a wise and seasoned developer understands the risks of purchasing property and adjusts their risk margins accordingly.
You can abate many of your property development risks by:
- Checking your building codes
- Speaking with area officials
- Reading the zoning laws
- Performing good market research
- Surfacing authentic local insights
5. Property development is linear
“It’s true that property development tries to follow a set structure. However, processes are rarely this streamlined and efficient during the actual development process,” says Ooi Kee Liang, founder and chairman of Ideal Property Group, a property development company in Malaysia. “Roadblocks are bound to come up, considerations are apt to get in the way, and unforeseen changes almost always enter the equation.”
Even the best laid plans can find themselves torn asunder. As a property developer, you must acknowledge this and roll with the punches.
Navigating the realities of property development
Whether you’re a seasoned real estate expert or just an inquiring mind, it’s clear that property development is much different from its popularly accepted concept.
Development is more than just a game for the rich. Although it may be linear in theory, it rarely is in function, and the process requires a great deal of time and effort to navigate successfully. It may not be possible to make a gigantic profit from your efforts, but the risks don’t have to exceed your comfort level or expectations.
Even if you aren’t overly familiar with the industry, expert guidance, seasoned mentorship, and quality partnerships offer everything you need to get started.
Understanding the realities of property development by performing your own research is the best and most efficient way to stave off lies and myths. The more you learn, the more you’ll grow, and the more equipped you’ll be for development now and in the future.