8 Tips for Finding Out What the Market Needs (Part Two)

In part two of this article, Steve Chandler has more market research tips to offer. This time, there’s a special focus on staying ahead of the competition.

In the first part, we discussed some of the basics of market research for residential property development. RDI’s Steve Chandler has additional tips to share, which can help you execute one successful project after another.

By the end of this article, you’ll know the most important information that you need to develop profitable residential properties. Let’s start with one of your biggest threats – the competition.

Tip #5 – Get to Know Your Competitors

Whenever you approach a specific market, you want to know what you’re up against. But you shouldn’t look at your competition as enemies that you have to beat. You can actually use them as a source of information.

To kick things off, you want to know who the competition is and what they’re developing. If they’ve been around for a while, it means that they know how to profit. It’s a great opportunity for you to figure out how to profit even more.

Knowing what the competition is selling can give you an overview of the demand. You can see what features work best and what you should avoid. It’d be a good idea to visit some recently completed projects to see what draws buyers in.

Apart from this, you can look at your competitors’ conversion rates to get an idea of how many inquiries will it take to find a buyer. You can see their marketing strategies and base your own strategy on this information.

In a nutshell, competition research is all about creating a baseline. You can use what they’re doing as a reference for what you’ll do once you start developing. This is why you want to know all about your competitors as soon as you find a market that you’re interested in.

Tip #6 – Don’t Forget the First Rule of Real Estate

Location, Location, Location. Any investor or developer would have heard this phrase many times. If you want to develop the right property for your market, you’ll want to keep it in mind.

Of course, the right infrastructure is an absolute must. Preferably, your property should be close to roads, schools, hospitals, shopping centres, and other desirable facilities. The more of them that your property has access to, the higher the potential selling price.

Of course, you still need to pay attention to the demographics. This is because it’s nearly impossible to have all the important facilities nearby. In this case, you should look at the age of your population and its family structure. This will show you the facilities and services that they care about the most.

When you find the right location, make sure to play to its biggest strengths when advertising. Since property development is by no means exclusive business, you might run into many competitors in the same area. This is why you need to give the market more than what it needs. You need to have an edge and the ability to showcase it.

Tip #7 – Pay Attention to Quality

The quality and features of your property can have a big impact on your profitability. You need to be very careful with the materials, appliances, and other features that you plan on including in your property. Otherwise, you might put a cap on your profits.

For example, if you’re in a lower socioeconomic area, marble, granite, and such luxury materials would be overkill. You’d have to raise the prices to way above what the market is ready to pay. You’ll struggle to sell the property if it’s even possible.

Moreover, you should think about whether there’s a feature that might set you apart from the competition. It should be something that the purchasers can identify with and without significantly increasing your costs. This can be any property feature really, so make sure to find one that stands out.

Tip #8 – Offer Different Packages

In many cases, your market won’t be uniform. You might have to serve multiple target buyers. Tending to their needs can unlock opportunities that you might otherwise miss.

Chandler says that the best way to go about this is to offer various packages.

For example, you might have an investor package. The properties would have affordable features in case they get damaged. Investors find this very valuable as it can save them a lot in maintenance.

You can also have an owner-occupier package, where you could install some higher-quality and longer-lasting items. When someone buys to live in your development property, they can rely on it for a long time.

Optionally, you can have a luxury package where you’ll include some high-end features and materials. These may mean premium-quality appliances, expensive materials, and other luxury components.

If you make multiple packages available, you can cover different niches within the same market. This can help you diversify and potentially boost your long-term profitability.

Be Diligent

As you can see, there’s quite a lot of information that you need if you want to develop the right property. You’ll likely invest a lot in your development, so it pays to make sure that you have all the right facts.

It’d be best to have all the information mentioned in this article before you start developing. This will make sure that you’re going in the right direction from day one.

If you need help gathering all the relevant information, Archistar can be the perfect tool. It shows you the most profitable sites in real time so that you can see which of them would best meet your needs.

Schedule a demonstration to learn more about how it works.

This content comes courtesy of Steven Chandler of the Property Development Institute. Steve Chandler is a third-generation property developer with over 35 years’ experience. He is a lecturer at two of Australia’s most recognised universities and travels Australia delivering property development training at introductory and advanced levels. Steve has also authored a number of books on building and property development.