2019 - Don't set yourself up for Failure
Property is riddled with Red Tape, it’s a slow transition Asset, and requires more cash equity than in years past. So why on earth do we bother?
Because Property, unlike shares, is substantiative (it’s bricks and mortar), it’s less volatile and holds its’ value better than shares, as a developer and asset owner you have choice in terms of location, design, tenancy mix etc., and finally land value can never be destroyed.
But time and again, I see people set themselves up for failure in either property development or investment. Following are 5 points to think about that could make you far more successful.
Repeatability – Can your property location be repeated? Is your design the same as all the others out there? Are you competing solely on price? These things are not wrong, but if your project/asset is not unique and can be easily repeated by others, then by default you’re competing on who can provide the lowest price to the market, which is a difficult way to play the game as there is always someone with deeper pockets than you.
Speculation is Out – Speculation is the quickest way to failure. Build it and they will come actually means build it without end user commitment and the banks will surely come. Get your revenue committed before you spend.
Cash (flow) is King – Prior to the GFC, debt was easy to obtain and made the world go round, however it also nearly destroyed the economy. Even with these lessons of the past, mezzanine equity is again on the rise…just be very careful because when the merry-go-round stops, those with the lowest debt win.
Be a Team Player – You’re the Captain, pick yourself a team of consultants who are experts in their respective fields in the areas you are weak in, and who you know and trust, and work with them over the long term. Stop having an adversarial relationship with everyone and be the captain of your team, not the evil dictator.
Control the Controllables – Stop thinking you can control everything. Markets are fickle, Red Tape is all over everything, and competitors are out to do whatever they can to get an advantage. You control only what you say and do, you have no control over other people or how they think and what they do. Understand this and apply the four rules above and you’ll go a long way to making 2019 your best year ever.
John Rosel