4 min.
Editorial Invest in Slovakia
In a previous article I wrote about what is important location for success in the real estate business. But it is far from the only factor due diligence of the investment opportunity.
You can be on the best street, but if there are already too many of you out there with identical product, you have a problem. The buying power will be divided and you won't get great results.
That is why it is so important to examine market around the location you have chosen.
I will give an example.
You will find a lucrative location for your development project of family houses. A truly great address. It should be a solid guarantee that the project will be successful with a decent return for all. But what if there are already dozens of new houses at the same address and dozens more under construction waiting for new owners?
You may be in a great place, but the market is starting to get saturated and you'll have to fight for profits. If you don't have anything, pull out.
The location is good, but you are not the only one who occupied this place. What then?
It will definitely help that you are able to come up with your project to differentiate it from the competition.
If a project comes to Invest in Slovakia with the ambition to build its investment project in a good location, for example in the city centre, we analyse the local market.
If we find that there are already similar projects in the area and properties waiting for their buyers, we want to see the added value of the new investment project.
We are looking for an answer to the question, Why should people buy this particular project?
Why are we actually doing this? Because we are doing our homework in the form of due diligence on an investment opportunity.
Here it is appropriate to ask a few questions. What makes your project more special than the others? Why should the future owner of a newly built house choose yours?
It is good to answer these questions very clearly. Ideally in no more than three sentences. If it is too complex a description of the benefits, no one will understand. Unfortunately, neither will the potential buyer.
In a lucrative but oversaturated location you can compete on price. To give the lowest price for comparable quality to the competition in the area. This will probably work for you in the end.
But it's not as easy as it's made out to be. Most developers who decide to build in a location where they are not alone try to sell their projects cheaper than the competition.
Too crazy price war often leads to "death". With a price war and unreasonable tug of war over who will sell cheaper, you get to the edge of profitability and even the slightest mistake will bring you down with your head cut off.
I managed to write it quite dramatically, but don't worry. It's not that bloody. In normal parlance - the developer loses some or all of the profit. But nothing dramatic that puts people's lives at risk is happening.
That's why I love the real estate business. If you do your job honestly and you analyze conscientiously due diligence of your investment plan, even bad circumstances cannot cut off your head.
A well-located and functional property is a value that is likely to always be in demand. The question is at what price you are able to sell it at the moment.
Let's go back.
Price is one factor that can help you in an oversaturated market. There are many ways to lower the price of your development project and thus sell cheaper. Well, that's a separate topic.
Personally, I prefer this option to fighting on price and thus reducing my returns from investment projects. Offer better quality or added value at the same price, which will be so important to potential buyers that they will choose your project.
It is a creative and charming task, but efforts to improve pushes real estate projects to new dimensions and improves the quality of life for many of us.
If I ask a developer how he wants to establish himself in a location where he's far from alone, I'm much happier if he pulls out a few fantastic reasons why he.
The smile will disappear from my face considerably faster if the only reason is a lower price.
This is a wonderful time of year to set ourselves apart and do exceptional projects that will have a positive impact on our surroundings. I don't think it has ever been so clear in history - at least in Slovak history - as it is now.
It's time to put the emphasis on ecology, renewable resources, environmentally friendly technologies. Emphasis on land-use plans, building coefficients and green space. Let us remember that the same architecture of apartments, terraced houses, streets and housing estates has been used for more than 70 years!
Great location attracts competition. In good waters you usually don't swim ♂️ alone. And if you want to stay strong, give people more. Give them a reason why just your project and not your neighbor's project.
The location is good, but what if you are not the only one who occupied this place?
I used this sentence in the introduction. I repeated it deliberately because in the previous article I mentioned that I would write to you about how the real estate magicians are handling this situation. From Donald Trump, who started building Manhattan in the 70s, to Slovak investment-development companies like J&T, Penta, HB Reavis, etc.
They'll buy the whole street. If they discover good water, where there is huge potential, they will occupy the whole lake.
Sometimes it pays to think big.
To our members in INVESTORS CLUBS Fingers crossed on the passive income journey.
