Bashar Ibrahim has spent a long time in the field of real estate development, having helped to raise and renovate dozens of properties. While it is a lucrative industry, Bashar Ibrahim has had to struggle to achieve success in property development, and he wants those considering entering the industry to be aware of his top 4 tips to avoid common pitfalls and maximise returns.
1. It all starts with picking the right property
The most important decision you will make with regards to any property development project is whether you are going to purchase raw land or has existing development approval.
Bashar Ibrahim notes that, for first-timers, a property that has already obtained development approval (DA) is an excellent place to start since they won’t have to go through the process of obtaining it. However, properties with DA already are going to have a higher upfront cost because of it. “Properties that have DA already can be less risky than buying raw land, but you still need to research them carefully before you buy”, he says.
More experienced property developers tend to go for raw land since its cheaper and they are confident they can get DA approved.
2. Engage with the highest quality builders
Of course, even the best initial investment can be rendered unprofitable if you engage the wrong builder. “You absolutely need to research and get to know different builders – never just assume they are going to be good as this can be a death sentence for your project,” Bashar Ibrahim points out.
When you start talking to prospective builders, you should ask them a range of questions such as what they are working on, what their lead time is, and what area they specialise in (such as commercial or residential). Bashar Ibrahim adds that “You need to scrutinise everything they say, and don’t hesitate to seek out past clients to get their testimony about the experience of working with that particular builder.”
3. Make sure the property is marketable
The old adage ‘build it and they will come’ may be true in some contexts, but Bashar Ibrahim explains that when you are trying to get the best sale price on the property you are developing, you need to do a little bit more than just oversee its construction. “You need to identify a target market early on and make sure that you can sell the idea of the property to them,” he says.
Bashar Ibrahim goes on to explain that real estate agents are some of the best resources when it comes to discovering what the most marketable and in-demand features are for the kind of property you are developing. “Real estate agents are marketers at heart, their job is to sell the idea of a property to a prospective buyer, and this means the best real estate agents are in touch with what people really want.”
4. Start simple and work your way up
Bashar Ibrahim notes that property developers, just like any other project-based professionals, need to start small and work their way up in complexity. “Biting off more than you can chew on your first project can lead to a disaster that puts you off the entire industry – prove that you have the talent and then work your way up,” he says.
Bashar Ibrahim explains that a single-spec residential property is a safe starting point that is manageable for new property developers. “It’s a great place to start because the expertise you develop with that project easily be scaled up to larger and larger projects as you get more experience.”