So You Bought Your First Investment Property, Now What?

January 24, 2024
Written by
Team Hive

Congratulations on purchasing your very first investment property! This is an incredibly significant milestone on your journey as a newbie property developer – but we get it, it can be a bit overwhelming figuring out what to do next!

But don't worry, we've got you covered.

Here's an actionable guide to help you navigate through your first property development project. From laying out the proper plans to avoiding costly mistakes, this advice will hopefully ensure you embark on this new journey with confidence and all the necessary tools for success.

Let's get started.

1. Plan before diving in.
Before starting any work on the property, you need to come up with a comprehensive plan.

We know it's hard, but don't let the excitement of your new purchase push you into hasty renovations and fast unthought out decisions.

• Evaluate the current state of your property
• Define your objectives – what do you intend to use the property for? A rental space, a quick flip, or perhaps for commercial use?
• Sketch out a provisional timeline and schedule of work

Remember, patience and thorough planning are key to a successful first property development project, so take your time!

2. Assemble your dream team.
It doesn't matter how much you love DIY, you can't do it all on your own!

Building a solid team of professionals and finding trusted trades will ensure your project runs smoothly and successfully.

Your team might look a little something like this:

• Architect/Interior Designer – they will help translate your vision into a realistic blueprint - with consideration on usage and target audience.
• Contractor – a reliable contractor will deliver quality work within the set timelines.
• Property Lawyer – they'll help navigate legal requirements and contracts.

3. Budget Wisely.
Establishing a clear budget from the offset is crucial, it will hopefully help you avoid unexpected expenses and maintain financial control.

Think about including a contingency fund within your budget, typically around 10-20% of the project cost – this helps caters for unexpected expenses along the way (which is highly likely to happen!)

Be careful not to overcapitalise as well. Ensure your expenditure will reap a sufficient return on investment, and don't forget to consider ongoing costs like property tax, insurance, and maintenance.

4. Understand Your Local Government Regulations and Permits.
It is so important to familiarise yourself with local building codes, zoning laws, and permit requirements.

Make sure you obtain any necessary approvals before commencing work on the property to avoid any penalties later down the line, and be sure to read and understand future zoning plans to mitigate risks of your investment depreciating in value.

5. Make Use of Technology.
Consider utilising technology to improve the process and running of your development project.

There are various prop-tech solutions around today that you can use to assist with everything from design to project management – and they might even save you some pennies!

Some examples:

Computer-Aided Design (CAD) Software: Tools like AutoCAD allow designers and architects to create 2D and 3D designs of the property, but don't be shy to use them too! Creating mockups of your interiors and spaces can enable you to visualise the finished product before construction even begins – giving you (and your team) clearer direction on desired outcome and material choices.

Virtual Reality (VR) and Augmented Reality (AR): These technologies can be used for virtual tours of properties, making it easier to market your finished product to potential buyers or tenants. It's also useful for showcasing proposed changes in renovation projects.

Project Management Software: Applications such as Asana, Trello, or can help you manage your project timeline, tasks, and team collaboration more efficiently.

Cost Estimation Software: This software provides accurate estimates of the materials, labor, and total project costs. Examples include PlanSwift and STACK.

Online Property Market Platforms: Websites and apps such as Zillow, Trulia, or Redfin help keep track of local market trends, ensuring that your development project aligns with market demands.

Smart Home Technology: Including smart home features, such as automated lighting, heating, and security systems, can increase the property's appeal and value - definitely worth considering depending on your chosen property strategy.

Although you're just at the start of your property journey, and you may think these technologies are too advanced for you right now, trust us – these technologies can really help streamline your property development project, increase efficiency, reduce costs, and enhance the property's marketability.

It's always best to start off on the right foot, than to catch up and improve strategies later on!

How to Avoid Costly Mistakes

Bringing costs down is obviously a top priority when starting out in the property industry, and at the forefront of everyone's mind!

Don’t ignore due diligence - if you do your research and prepare (and then prepare some more) you're only helping yourself further down the line.

Before starting renovation work on a development project, it's critical to run a thorough inspection of the property. This action can detect potential issues, saving you from costly repair expenses down the line.

When you begin to choose your materials, although it can be tempting to in order to save some pennies, don't compromise on quality. Choosing cheaper materials or contractors could result in poor workmanship, leading to additional costs in the future and diminishing the end product.

This is your project and your baby, so make sure to regularly check on the onsite work progress and regularly review your budget to avoid overspending. Don't worry about coming across as overbearing (a common symptom of imposter syndrome), as it's important your project is monitored effectively.

On the topic of confidence and imposter syndrome during your first property development project, never be too proud to seek expert advice if you're unsure about something. Mistakes in property development can be costly, but they can be averted by consulting professionals or more experienced developers. Surround yourself with a group of people who know what they are talking about, get in The Hive Members Club, or reach out and ask questions!

Remember, as a novice property developer, it's okay not to have all the answers. This journey is a learning process, and there will undoubtedly be a few hiccups along the way. But armed with this guide, you're set to blaze the property development trail.

Good luck girls!