So it’s your first time buying a development property and you want it to go as smoothly as possible. When done well, property can be a very rewarding investment – often providing you with a huge return on your investment. However, when done poorly you can simply be throwing money away trying to make your development take off. Here are 10 tips to ensure you get the most out of your investment:
#1 Research is key
You can’t just buy any old rundown property, do it up and expect to make a small fortune. Unfortunately it doesn’t work like this. Make sure you research the area to find out how much similar properties sell for in the area and whether or not they are actually selling. Property turnaround is important in development as you don’t want to be holding onto it for ages after the project is completed.
#2 Pay the right price
The money you make on the property isn’t decided by how much you sell it for, but rather how much you buy it for. By paying less initially, you automatically increase your profit when you sell. This means that you can spend more money doing it up to a higher standard or even lower the price to ensure a quick sale without losing cash. Development finance lenders can provide you with competitive rates that make the properties affordable even if they are higher than your initial plan.
#3 Calculate your costs
This is the biggest mistake first time developers make. Work out exactly what needs to be done and how much it will cost you. Getting actual quotes will give you a much better understanding of how much the development will cost. Buying a property that requires an extensive amount of expensive work will lose you money in the long run.
#4 Supply and Demand
Will people actually buy what you’re building? If you’re in a student area then converting a four bed house into an 8 bed will make you a tidy profit, but in a residential area this will be a very hard property to shift. Before you decide on anything make sure that there is a market for it otherwise you may end up sitting on a development that won’t sell.
[Image via Flickr]
#5 What adds value
There are certain things that will tack on value to the property and others that won’t do anything for it. If the area has limited parking space then a driveway or even a garage could add a huge amount of value to the property, while a shed with electricity and lighting will add nothing yet cost you a fair bit to install.
#6 Keep you out of it
Don’t let your personality and tastes dictate the way in which the development takes place. Try to keep the décor and layout simple and basic so that it will sell. Another benefit of this is that the less decoration you put in, the cheaper it will be to do and the faster it will sell – reducing the overall cost.
#7 Forget luxury
Spending money on CCTV, build-in speakers, and wine fridges won’t add value to the property and definitely won’t be the make or break feature that sells the home. Instead of pumping money into luxury, use it to put in quality bathrooms, kitchens and other core features – buyers will be much more impressed by sturdy features than fancy luxury items and it will save you lots of cash.
#8 Get smart advice
Just because your friends and family are giving you lots and lots of ‘helpful’ advice doesn’t mean you should take it. Unless they are developers themselves, their opinions are pretty much useless. Only listen to clever advice from professionals and you’ll find that things come together much faster and cheaper than listening to poor guidance.
The most important thing to remember is that property development is all about money. You need to make sure that everything is within cost and on time in order to make a profit on your development.
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