Are you scared?
I hope not! If you are then you probably only see the unknown, and that is what’s worrying you.
We all fear the unknown in some manner yet every day we go about our lives not knowing what’s going to happen. We aren’t scared to live our lives so why would it be any different with property development?
Property developers don’t have a magical crystal ball to tell them what is going to happen in the future, nobody does! So why be scared of property development during an economic downturn?
Do you have to be careful? Absolutely! Do you have to understand what is happening in the economy? Most definitely! Do you have to have an opinion on what the economy might do? Yes!
Property development is not like investing in shares. Shares are exceptionally volatile and money can be made and lost in a matter of seconds. Property prices are not volatile, they take time to move upwards or down and can be quite predictable as the metrics that inform the value proposition of property are solid.
For example, if the population is growing then there is a need for property, assuming there was not a excess of property previously. This is a lesson for you, you have to know the metrics.
In every career there are experts, there are people starting out and there are everyone in between. But make no mistake, the experts are always learning and by learning they minimise the number of stuff-ups they make.
The trick is to learn as much as you can from the experts without having to make the stuff-ups they have.
If the fundamentals are right then the likelihood that you are going to stuff-up is minimised. If you undertake your due diligence properly then you are less likely to stuff-up on your site acquisition.
And if you do your feasibility studies based upon sound rationale and good input information from your experts, and don’t be too optimistic, then your are even less likely to stuff-up.
If you treat the authorities with the respect they deserve and create quality documentation to support your application, again you are less likely to stuff-up.
If your independent market research was sound then your feasibility revenues will be correct and the exact nature of the product you are creating will be exactly what the market needs so your sales will occur. And if you have a sound approach to maintaining contact with your purchasers during the life of your project then you are likely to be able to settle your transactions promptly upon completion.
And if you have properly considered the project delivery methodology for your project then you have chosen your consultant team wisely and engaged them appropriately to deliver the design in accordance with your building contract strategy.
All the above, these fundamentals, are intended to be included within your project plan. Remember, failing to plan is planning to fail.
Property developers who prepare project plans, and instigate them, tend to survive the downturns. The only reason why you, as a property developer in a downturn, would be scared is if you haven’t followed a professional, practical and sensible plan to your project.