Fortunes have been won and lost in property development in the UK. So if just starting out what would be good tips to help you in your property development career? Here are a few…
- Business Plan
Generally a major mistake made by newbie developers is not planning their budget correctly and from the outset. As costs arise they pay them in a reactive way. Before they know it, they have overspent and need to borrow from various sources just to keep afloat.
Plan exactly how much you need for every possible piece of expenditure. Do not guess, get quotes and check prices. Include finance costs and and a realistic timeframe for completion, rather than a desired one. Also after you have planned everything, add another 10% for contingencies.
In respect of finance, there will be different types of loan depends on whether you will also buying land and building up from scratch, or whether you are just doing a refurbishment project.
- Location, Location..
Check out the area you want to buy in thoroughly. Have a look at the sold prices rather than asking prices and especially the ceiling price in each road. It is no good creating the best house in a street if the required price to make a profit far exceeds the top price ever paid in that street.
Check out also how long it has taken for properties to sell in that street. Property development is about cash flow, so you do not want a potentially profitable property if it is going to be on the market for a year costing you money. Getting potentially less profit but a faster sale will help you get to your second deal.
- Profit made when you buy
This is always worth bearing in mind. Your profit is made when you buy not just when you sell. So the key is to only proceed on a deal if you can get a cheap price. Do not get emotionally attached to any property, if the deal is not right be prepared to walk away.
If you spend too much at the beginning, it may mean 6 months of work for nothing or for a loss. Have a look at around for derelict properties, find the owners through the land registry if you can and then make them an offer. Sometimes the best developers proactively create deals rather than making offers on existing ones. Contact quick property buying companies, who buy properties at a discount. They may sell directly to you for a below market value price.
- Get a reliable builder
Be honest with yourself about the skills you do and do not have if planning on doing the work yourself. Sometimes it can be a false economy planning on doing the work and not using professional help.
Get lots of quotes from builders, examples of their work and recommendations if possible. Set a realistic timeframe with them and get a contract drawn up. Getting everything clear from the outset will avoid arguments and disputes later.
- Build with you target buyer in mind
From the outset it will be helpful to have identified the type of person who may buy your finished property. The level of house will determine how much you should spend in each room. If you are planning to sell to a family, there is no need to buy furniture as they probably have their own, but you can hire some if you want to stage the property. If targeting young professionals or first time buyers, you may want to buy furniture as they probably will not have their own. Anyway think about the possible tastes of the buyer than your own personal tastes.
If you would every like to sell your development project quickly for cash or would like to sell your property to do a project, feel free to contact Quick Property Buyer for cash offer.