Many people are now deciding to start up their own business in property development, or to take on a development project for their own leisure. The main reason for this, is that there’s a lot of money to be made and you don’t necessarily need any qualifications to become an expert; making it an easy avenue to get into if you have the funds. While the industry hasn’t been plain sailing over the last few years and holds a significant risk factor, it’s certainly looking up for the future and has become an attractive business for new developers.
In this guide, we’re going to provide some useful tips on what you need to know about developing a property:
Create a business plan
Regardless of whether you’re aiming to become a full-time property developer or are trying your hand at one project initially, it’s essential that you have a detailed business plan to get a clear idea of your finances and costs amongst many other useful aspects.
Your expenses will be covering much more than purchasing the property and re-furbishing it, as you’ll also have to pay out for estate agents fees, solicitors and surveyors, which can start to add up and cost you thousands of dollars more than what you had anticipated. As a result, it’s important your business plan covers every aspect of finance so you don’t land into difficulty later on down the line.
Take out a bridging loan
A bridging loan will potentially become your savior if you’re already paying off a mortgage for your personal home, and don’t yet have the funds to purchase a property for investment purposes. Doing so is difficult, or near enough impossible for many individuals which is where a bridging loan will come in handy. Bridging loans can help finance property development projects without the concerns of falling into financial difficulty, or having to wait for years to pay off the personal mortgage before you can commit to professional projects.
Location is key
If you’re new to property development, one of the most important factors to bear in mind during the house hunt is location, location, location. This doesn’t necessarily mean having to choosing a property in the wealthiest neighborhood, but remembering to be savvy about what your target audience may be searching for when it comes to purchasing their dream property.
For example, ambitious young adults will be on the search for a property that’s centrally located with good transportation links on their doorstep, while young families will be keen to be next to good schools, and with plenty of activities nearby.
Pay attention to the housing market
Although the key tip of property development is to buy at a low price and sell for a significant profit, there’s far more to it than that. Over the past few years, the property market has faced highs and dips, but cities such as London have always been consistent, which is why this area has become a haven for property developers in the last few years. When on the search for a property, it’s important to do as much research on the area as possible from trustworthy resources such as the likes of estate agents and newspapers.