Get it right, and property development can be a rewarding career.
With all of the economic fluctuations of recent years, many of us are looking for a safe haven to invest our money, as well as a change of career which allows us to work more flexibly to accommodate family commitments and other ventures. These two factors combined make property development a hugely attractive choice, and one that many dream of pursuing. But for all it's many benefits, it can easily go wrong if a few simple factors aren't in place. If you're keen to get involved the right way, here's how…
Create a Business Plan
Even if you're hoping to do property development on the side, it's still a good idea to find a business plan template online and create one for your new venture. From the legal side, to organising building contractors and eventually marketing your revamped property, it's crucial to have a clear idea of what you're doing when big money is involved.
Sorting The Financing
If you don't have substantial savings, you'll be looking at securing financing in the form of mortgages and loans to fund your initial property purchase and building works. This is easily where it can all fall apart if you don't do your research. You need to know every detail about the area and land you're planning to develop. Check out factors of the area which determine what the market is - for example, good local schools attract young families - and tailor your development to that market to increase your chances of a high sale price. In that scenario, you may look to add a large open plan kitchen and family room with bi-fold doors leading into the garden, whereas if your market is professionals, a master suite with bathroom and dressing room makes more sense as a development.
Location Is Everything
Make sure you also understand the land, especially if you are building a new dwelling from scratch. The worst mistake you could make is cutting corners when it comes to getting surveyors reports and investigating in detail ground water monitoring and other important factors. Understand also any developments planned for the local area such as high speed rail expansions - factors like this can turn a nondescript location into somewhere great for people to live and commute from. Location is the one thing you cannot change so it really has to be right. Spotting up any up and coming areas will show you the best return on your investment and help you to make a profit.
Pay The Right Price
Getting too emotionally involved and paying over the odds is a huge no-no as well. It's your business and you are bound to be passionate. But ensure that your decisions are guided by the numbers, as you are unlikely to be living there yourself. Most of your profit is actually made when you buy rather than when you sell, so negotiate hard for the best margin. Understand the ceiling value you can hope to achieve on property and any issues, be they structural, planning or disputes with neighbours. If the property still looks like a good investment in the worst case scenario then it probably is.