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Beware The Invisible Property Developer

Ritchie Clapson, co-founder of propertyCEO, comments

What does a small-scale property developer look like? Ask around and you’ll get many different answers, but there are likely to be some common themes. Wealth will be a common one, as very few people have heard of a poor property developer. There may also be a mention of nice cars and perhaps something about a well-tailored appearance. And of course, they’ll live in a lovely house, even if it probably isn’t one that they’ve built for themselves.

The reality is, of course, nearly always a little different from the perception, but equally, there’s more than a grain of truth to the stereotype. But who really cares how property developers are perceived? The answer, it turns out, are property developers themselves. Or at least they should do. Let me explain why.

The first thing to understand is that most property developers don’t build houses. This may sound a little controversial given that a cursory look at any developer’s website would suggest otherwise, but for the most part, it’s true. The reality is that developers cause houses to be built, which is somewhat different. This may sound like I’m trying to be clever, but the distinction is important. The developer is the catalyst that makes a development project happen; the entrepreneur who pulls together a team of people with the relevant skills to build something that will make them a profit. I’ve worked on hundreds of development projects but have yet to lay a single brick or prepare a single set of drawings. I’ve not even chosen any curtains (at home OR at work, come to think of it). The point is that it’s the team of professionals that work for the developer who builds the houses. The developer simply creates the environment for the project to happen, and they also take the financial risk. And that’s why they receive the lion’s share of the project’s profits.

Another critical piece of the development jigsaw is the role played by the project manager. For those who have only done refurbs, flips, and HMO conversions, you may not have had the luxury of having a PM run your projects for you. In fact, you may well be thinking that YOU are your own project manager. But step just one rung up the development ladder to a small conversion project, and you’ll suddenly be able to afford both a main contractor and a professional project manager to run the show. This immediately elevates you from a hands-on middle manager to a boardroom position. Now it’s your project manager who’s running the operation. They’ll be visiting the site regularly and then updating you by phone on progress. Of course, you’ll still need to make decisions on a few things as you go along, but the reality is that you can deal with most issues remotely through your PM.

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