You've done it! You've found the Holy Grail, a cracker of a property development deal.
I know that whenever I come across a deal and see a nice chunk of profit sitting there just waiting for someone to grab it, a little thrill races through me. I've found the needle in the haystack!
I'm sure you do exactly the same thing. BUT... and it's a big but (call Sir Mix A Lot, I've got an idea for a song) should you do the deal?
What??? I hear you cry. "I've found a great deal, why wouldn't I do it?"
Now, if you're not a fan of tough love, you might not like what's coming. Because if you're doing the work, looking for deals, building relationships with agents, and knocking on doors, then there will inevitably come a point where good deals start to flow your way. That doesn't mean you should pursue all of them.
In fact, you run the risk of falling into the "Shiny Object Syndrome" trap and losing sight of your goals and pathway.
I'm going to take a moment to go back to the basic principles of my Property Development Formula. One of the crucial learnings from the course is "1 Strategy, 1 Council, 3 Suburbs".
Essentially, you decide which strategy you want to pursue. You do the work to become an Area Expert in your Council, then you complete your Suburb Analysis to determine which 3 suburbs in that Council are the best places to pursue your strategy.
Does it take some time and effort to reach the end point? Yes it does. But it means that when a deal pops up in that suburb, you know immediately if it suits your strategy and what sort of numbers it's likely to require for it to be profitable.
Now let's circle back to the deal you've found, and ask some important questions about it.
1. Does It Fit My Strategy?
One thing I say a lot is to avoid being a jack of all trades and master of none. Essentially, your aim is to pick your property development strategy and pursue it exclusively. Learn every aspect of it, and continue to learn until your knowledge is miles deep for that strategy. It may be that you progress from small deals to large deals, but it's within the same strategy.
The trouble with many deals that come across your desk is that they're a different strategy to the one you're pursuing. For example, you've chosen land subdivision, and currently you're at the stage where you're doing subdivisions around 8-12 lots.
Your friendly neighbourhood agent pops up with a 3 unit development. Off-market, the vendor wants to sell urgently, the price is really low. The money-making glands kick in because it's a great deal.
Stop! Unit developments are not your chosen strategy. This deal will distract you from your subdivision strategy.
2. Is the Deal the Right Size?
Deals come in all sorts of shapes and sizes, from a very small 1 into 2, right through to massive developments with hundreds of new properties created.
So let's go back to the example I used in the first point. You're at the stage where you're doing medium-sized land subdivisions, somewhere around 10 lots. Say the deal is now a 3-lot subdivision. That's quite a bit smaller than the deals you're looking for. You stopped doing development deals that size a couple of years ago.
Stop! Smaller deals are no longer your strategy. It often takes a similar amount of time and energy (but more money!) to do a big deal as it does a small deal. If you've moved on from smaller deals, why would you go back?
3. Is the Deal in your Area of Expertise?
Earlier I talked about becoming an Area Expert in 1 council and 3 suburbs within that council. This time the agent has popped up with an 8-lot subdivision site. Awesome! But it's on the other side of the city. Sounding good so far, right? It's your strategy, it's your deal size...
Stop! (I bet you knew that was coming!) Chances are, you know very little about the area where the deal is located. You're not an Area Expert on the council or suburb.
In this regard, yes, you can now spend some time doing all that research and learning what you need to know to be an expert. But what happens if, at the end of all that work, the deal doesn't stack up as well as you thought it did?
And given you're in a position where lots of deals are crossing your desk, what if you stop and try to become an instant Area Expert for every single one of them? I'm thinking you're going to be wasting a LOT of your valuable time on deals that are going nowhere. So don't do it.
Right now you're probably getting really frustrated. You can see the deal has at least enough potential to make it worth pursuing into the due diligence phase. As a Property Developer your spidey senses are tingling, and the deal is just so, so shiny...
It's a Distraction
It doesn't matter how shiny it is, it's a DISTRACTION. Deals that don't fit your strategy, your deal size or your area of expertise distract you from your goals. And that's not a good thing. It burns resources, time and energy.
I'm not going to deny the deal might have the potential to make you good money, but at what cost? For example, if tying money up in a small deal means you've made it harder for yourself to secure the big deal that should be next on your list, is it worth it? If being busy trying to become an expert in a different area means you don't put time into finding deals in your area of expertise, is it worth it?
Progressing your property developer journey is what this is all about, and why choose the winding path with lots of pitfalls and distractions, when the Property Development Formula clearly lays out a 5-year action plan for you to achieve your goals? Trust the process!
Back to the shiny object in front of you. Take a deep breath, and flick it on to another developer. Secure yourself a finder's fee by listing it on Development Sites Australia. Or post it in our Facebook group "Development Site Deal Hub".
Then get back to finding the right deal for you.
I know that whenever I come across a deal and see a nice chunk of profit sitting there just waiting for someone to grab it, a little thrill races through me. I've found the needle in the haystack!
I'm sure you do exactly the same thing. BUT... and it's a big but (call Sir Mix A Lot, I've got an idea for a song) should you do the deal?
What??? I hear you cry. "I've found a great deal, why wouldn't I do it?"
Now, if you're not a fan of tough love, you might not like what's coming. Because if you're doing the work, looking for deals, building relationships with agents, and knocking on doors, then there will inevitably come a point where good deals start to flow your way. That doesn't mean you should pursue all of them.
In fact, you run the risk of falling into the "Shiny Object Syndrome" trap and losing sight of your goals and pathway.
I'm going to take a moment to go back to the basic principles of my Property Development Formula. One of the crucial learnings from the course is "1 Strategy, 1 Council, 3 Suburbs".
Essentially, you decide which strategy you want to pursue. You do the work to become an Area Expert in your Council, then you complete your Suburb Analysis to determine which 3 suburbs in that Council are the best places to pursue your strategy.
Does it take some time and effort to reach the end point? Yes it does. But it means that when a deal pops up in that suburb, you know immediately if it suits your strategy and what sort of numbers it's likely to require for it to be profitable.
Now let's circle back to the deal you've found, and ask some important questions about it.
1. Does It Fit My Strategy?
One thing I say a lot is to avoid being a jack of all trades and master of none. Essentially, your aim is to pick your property development strategy and pursue it exclusively. Learn every aspect of it, and continue to learn until your knowledge is miles deep for that strategy. It may be that you progress from small deals to large deals, but it's within the same strategy.
The trouble with many deals that come across your desk is that they're a different strategy to the one you're pursuing. For example, you've chosen land subdivision, and currently you're at the stage where you're doing subdivisions around 8-12 lots.
Your friendly neighbourhood agent pops up with a 3 unit development. Off-market, the vendor wants to sell urgently, the price is really low. The money-making glands kick in because it's a great deal.
Stop! Unit developments are not your chosen strategy. This deal will distract you from your subdivision strategy.
2. Is the Deal the Right Size?
Deals come in all sorts of shapes and sizes, from a very small 1 into 2, right through to massive developments with hundreds of new properties created.
So let's go back to the example I used in the first point. You're at the stage where you're doing medium-sized land subdivisions, somewhere around 10 lots. Say the deal is now a 3-lot subdivision. That's quite a bit smaller than the deals you're looking for. You stopped doing development deals that size a couple of years ago.
Stop! Smaller deals are no longer your strategy. It often takes a similar amount of time and energy (but more money!) to do a big deal as it does a small deal. If you've moved on from smaller deals, why would you go back?
3. Is the Deal in your Area of Expertise?
Earlier I talked about becoming an Area Expert in 1 council and 3 suburbs within that council. This time the agent has popped up with an 8-lot subdivision site. Awesome! But it's on the other side of the city. Sounding good so far, right? It's your strategy, it's your deal size...
Stop! (I bet you knew that was coming!) Chances are, you know very little about the area where the deal is located. You're not an Area Expert on the council or suburb.
In this regard, yes, you can now spend some time doing all that research and learning what you need to know to be an expert. But what happens if, at the end of all that work, the deal doesn't stack up as well as you thought it did?
And given you're in a position where lots of deals are crossing your desk, what if you stop and try to become an instant Area Expert for every single one of them? I'm thinking you're going to be wasting a LOT of your valuable time on deals that are going nowhere. So don't do it.
Right now you're probably getting really frustrated. You can see the deal has at least enough potential to make it worth pursuing into the due diligence phase. As a Property Developer your spidey senses are tingling, and the deal is just so, so shiny...
It's a Distraction
It doesn't matter how shiny it is, it's a DISTRACTION. Deals that don't fit your strategy, your deal size or your area of expertise distract you from your goals. And that's not a good thing. It burns resources, time and energy.
I'm not going to deny the deal might have the potential to make you good money, but at what cost? For example, if tying money up in a small deal means you've made it harder for yourself to secure the big deal that should be next on your list, is it worth it? If being busy trying to become an expert in a different area means you don't put time into finding deals in your area of expertise, is it worth it?
Progressing your property developer journey is what this is all about, and why choose the winding path with lots of pitfalls and distractions, when the Property Development Formula clearly lays out a 5-year action plan for you to achieve your goals? Trust the process!
Back to the shiny object in front of you. Take a deep breath, and flick it on to another developer. Secure yourself a finder's fee by listing it on Development Sites Australia. Or post it in our Facebook group "Development Site Deal Hub".
Then get back to finding the right deal for you.
