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Like property investors who buy existing properties, property developers also need the help and guidance of a dependable and trustworthy team to keep them on the path to success—are property managers an indispensable part of this ‘A-Team’?
Eric Brown has recently submitted a development application for his third project in Lilyfield, where he would turn a warehouse into luxury apartments. At the moment, he’s currently got his builders lined up for when he gets the green light from the local council, as well as his engineers and architects, who have helped him layout a building plan is high-quality, cost-effective, and adheres to the standards stated in the Local Environmental Plan.
According to the property developer, his biggest concern at the moment is the funding for his development project.
He explained: “The problem is the funder won't fund [the building] because the funder will only fund it based on the specifications at the time when you fund that.”
“That's part of the construction loan, and they'll want to know when the milestones are [and] when the payments are coming out—that's all pre-planned so you can't deviate from that plan or the funder starts getting nervous.
“It's all about funding at the moment,” Eric added.
This setup has considerably limited his flexibility as a developer because he cannot make any big changes to the project without going through a rigorous process set by the funder.
The role of a project manager
Smart Property Investment’s Phil Tarrant believes that engaging an independent project manager is just as important as having a trusted builder throughout your property development journey, especially for those who have only begun using this investment strategy. A project manager can help you save both time and effort so you can focus on other major priorities that need more of your attention.
Many developers often forego project managers once they found a good builder, but there are very different skill sets associated with being able to perform well as these two professionals.
Phil said: “A project manager needs to have good processes, systems, planning procedures, delivery, communication skills, time management skills. This is project management. It gets hard.”
“Whereas building, once you get started, how often [will] there [be] problems though? There's whether stuff doesn't arrive on time—a lot of things you can manage with good project management,” he explained further.
Moreover, a good project manager also helps a developer avoid any emotional connection to the properties.
According to Eric, being emotionally connected to a project can sometimes be a hindrance to making rational decisions, which could lead to the ultimate failure of the venture.
He said: “You can't make a rational decision based on some other factors like cost or time when you're emotionally attached to the process … I think in an instance where you did want to detach yourself emotionally from the build, that'd be a great opportunity [to get a project manager].”
Trust that your property manager, as well as all the members of your team, have your best interest in their minds. Eric, for instance, has not only been guided but also exposed to opportunities that he would not have otherwise encountered had he chosen to work alone.
“There were places I'd been that I didn't even know. I was thinking in my commercial head, ‘Oh shivers, I can use that for this project. I can use that product for this job.’ It was amazing and it was lots of fun,” he shared.
Property developers must strive to remain proactive throughout the building process without being too attached to the project. After all, it’s all about building a quality product that buyers or tenants will want to spend their money on.
“You've got to make sure that you're A team, so your development team is 100% trusted and operating in your best interests,” Phil concluded.
Tune in to Eric Brown’s episode on The Smart Property Investment Show to know more about how his most recent purchase of a warehouse is performing two months on.