Sports cars, sharp suits & expensive watches - the clichés associated with property investment and development are almost as old as the game itself. They are not dissimilar to the images conjured up when you think of professional sport either. And that's not where the similarities end.
But nobody started out winning, and even for the high-profiles in the game, it's been a challenging uphill journey, trust us. Getting a toe-hold in property development for the first time can be a challenge, not least securing the necessary finance.
Lenders can be discerning - even obtuse - and despite the possible returns, they can be elusive to pin down. It can be tough to persuade them away from 'plain-vanilla' deals or tried and trusted property developers. Borrowing opportunities for newbies can be challenging to unearth and even harder to bag.
It is an age-old conundrum - how do new SME Developers (SMEDs) and Investors get the experience to give the Lenders the confidence? Here's how nReal suggest you go about convincing the 'Money'. Repeat the steps often enough, and you'll soon make progress - that's why we call it the Etc.model:
Be honest, if you were a lender, would you give your money to the green newbie or the veteran developer? Lenders like experience, but they're not so hard-nosed as to ignore the fact you have to start somewhere.
At nReal we talk about the Vision, Map and Landscape. We recommend you tie these in to help you show Lenders that you are working to a bigger plan. Most lenders will acknowledge your earlier projects may be small in size and value. But if you can show a road map to build up to larger schemes gradually, they'll recognise your intent.
If you don't have enough experience, don't despair. Start thinking about your team and build the knowledge of these associates into your argument.
Property development requires diverse skill-sets through the whole journey. You may have some of the necessary expertise, but it's unlikely you have the full set. The good developers we've seen know what their strengths are, and more importantly, where the gaps in their abilities lie. The excellent developers know this and, through their network, bring in experts to fill these gaps.
There are three catch-all areas you need to cover off to succeed in property development. The first is data gathering or due diligence, the second is team selection and management, and finally, decisiveness.
It's highly likely that you will need to bolster your (human) resources. Like I say to my kids "There's no 'I' in team" - as a property developer (or investor) you do need to think of yourself as a Pep Guardiola or Jürgen Klopp. Ensure you've got the strongest possible line-up to take on the challenge in front of you. It's ok to hire smarter people than you - it's your business.
These fundamental skills apply to all stages of all development projects. Can you assess the opportunity or challenge in front of you? Do you have a vision of the result? Can you map out a clear strategy to achieve it? Do you have something up your sleeve should things not go to plan? Finally, can you get off the fence and make a tough decision when needed? Essentially, you need to be able to:
- Acquire the land or building at the right price;
- Project manage the uplift through the planning process, as well as pre-development and development phases; &
- Exit the site to maximise your returns
At nReal, we call this our APEx program, and we help new SMED and Investors through the journey, refining their skills and team as we go.
You will undoubtedly have some strong skills (or at least one). Perhaps you're an ex-estate agent with a nose for a deal. Or a QS with an eye for detail and a skill for staying on top of costs. Or a planning consultant who knows how to submit a water-tight planning proposal. Well done - make a note of that and now fetch a mirror.
Stare at the person looking back at you and be honest about your weaknesses. Recognise where you need help, and in the first instance, look to family, friends or associates. It's not only useful to work with people who already know you, but it also keeps everyone honest and focused too.
If there are still gaps in your line-up, start looking further afield - get recommendations or advice (from nReal for example). Not only will Lenders appreciate the team and skills you've pulled together, but you will also learn and grow quicker. With increased/leveraged knowledge come bigger and better schemes. And with that, comes better terms, larger loans and more favourable products from Lenders.
Want to know more?
nReal gets SMEDs & investors leveraging their existing resources to make the most of their opportunities. Our APEx program is ideal if you want to grow but are time poor or lack resources and structure. nReal work with you through the whole journey, introducing professionals – including finance specialists – along the way.
As we say at nReal, "Connecting People has Real Value".