6 tips on starting a property development career
This week we feature a guest post from Affirmative on getting started on a career in property development.
Property development is one of the most lucrative industries in Britain today and many people, from amateurs to wealthy investors, try their hand at it.
If you’re considering a career in property development, follow our top tips for getting started, and you should see a good return on your initial efforts.
1. Location and Price
Finding the right location is crucial when deciding where to invest in property. The ‘nicest’ area isn’t always the best place to buy. Places with up-and-coming businesses, on the outskirts of cities, with good transport links and good schools, are great areas to consider investing in.
Be careful when it comes to price. If you pay a high price for a property, you may not be able to make more money when you sell it on, so always try to knock the asking price down as far as you can. Look out for properties that have planning applications with a local authority, as they may accept an offer subject to planning permission. If the planning permission is granted, you will get the property and planning permission at once.
2. Research and Auctions
There is plenty of money to be made in property development, but it is just as easy to lose money, so it is always important to invest wisely and research extensively before you buy. Find out what the average sale price is in the area (for the particular type of property you want to buy), how much stamp duty will be, and how much any other fees would amount to. Carefully consider how much it will cost to develop and refurbish the property.
There are always good bargains available at auction, but remember to set yourself a limit: you don’t want to get carried away and pay a huge amount. Try not to bid until you have seen the first few bids, as this way you’ll be in a better position to gauge how the auction will go.
Always ensure that the legal pack is reviewed by your solicitor before the auction – if the hammer goes down on your bid you are contracted to buy the property and there is no turning back.
3. Sellers and Buyers
You can get a great deal if you find the right seller. Speak to your estate agent; if they know that the seller is moving abroad, in the process of a divorce, or financial pressures, they will likely want to sell the property quickly – and possibly at a lower price.
When you refurbish your property, think about who you will probably be selling or renting to. For example, if you are renting the property out to students, be sure to buy strong fixtures and fittings. On the other hand, if you are renting apartments to young professionals, they may expect more stylish fixtures and fittings, and neutral colours, so that they can add their own personality to the property.
4. Avoiding Amateur Mistakes
It is easy to fall into traps and make the mistakes that most first-time property developers are prone to, but you can take a few simple steps to make sure that you avoid such problems.
For example, you can simply take a drive around the area where you may invest. Inspect the transport links, the neighbourhoods, the local shops and the general state of the buildings. Go back and do this at night as well – chiefly to assess the evening parking situation, but also just to see how the place feels after dark.
It is also important to remember that property development is all about adding value to a building yourself. Be proactive and practical, think about what will actually add significant value to a building in that particular area, rather than just waiting for property prices to rise.
5. Being Cautious
Never be in a rush to buy – and certainly never show it if you are. Wait until the perfect property comes along for you and then buy; there is usually no need to hurry, and you want to be sure that you have made the right purchase. Be cautious and look out for issues such as disruptive neighbours and asbestos.
Although you can always add value to a property, in many cases there is only so much value you can add, especially with a low budget. Therefore, it is important to buy a property that is realistic for you. For example, you cannot completely refurbish a dilapidated house on a small budget.
6. Getting Started
Finding the money to make your first investment can be difficult so many developers choose to take out a development finance loan. Follow our Beginner’s Guide to Development Finance to find out more.
It may seem as though there are many things to consider when starting a career in property development, but if you follow the simple steps in this article, you are on your way to a newfound career.
This guest blog is written by Affirmative, leading providers of development finance.