How to Become a Successful Property Developer

High Street1It is possible that investing your money into property is one of the best financial decisions you could ever make. This is because, if placed in the right hands, a property has the potential to grow in value and make you more money in the long term. Just because it is made to look easy on TV, it doesn’t mean that you can finish a project like this within a couple of days. That is why it is so important to extensively plan ahead before you begin.

Property Development Overview

In essence, property development involves buying a property, renovating it and then selling or renting it out. Selling or renting the property out should give the buyer a nice bit of profit after the renovation has taken place. Property development appeals to certain people for the main reason that you can be your own boss. You can also choose to be as little or as much involved in the design, planning and budgeting of the project as you want, depending on how many people you hire to help you.

Start Small

When first starting out in this business, it is vital that you set realistic expectations for yourself. If you are planning do this as a couple for instance, a lot of stress can be caused by taking on too much too soon. You may also find that your budgeting becomes out of control as you fail to anticipate certain costs.

Consider Location

Location has a large part to play in the value and success of a property. Buying an expensive house in the centre of a good area will cost you more money than you will make back. Doing this does not leave you much room to make a profit; however buying a property on the outskirts of a good location will give you more of an opportunity to improve it. Remember it’s not about choosing a house in the nicest street. It is more about the key attractions to the house, such as the local schools and public transport.

Buy at Auction

There are bargains to be had at auctions, however you should try not to get carried away and stretch your budget too much. It is recommendable that you place your first bid at 10% of the asking price and work up from there. You can also try and negotiate with the seller if the bidding doesn’t reach the reserve price.

Protect yourself Financially

Just like Commercial property developers claim capital allowances to save money, private property developers need to investigate the best ways to look after their finances also. Once you have worked out all the costs involved in renovating your property, it is a good idea to then set aside a contingency fund. This can be used to cover problems such as delays and extra unforeseen costs. Your fund should be made up of 10-15% of your overall renovation budget.

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