Property development can be extremely profitable, but it can also be incredibly hard work and full of complex decisions and problems.
Here are some key tips that will help you to (hopefully) make a success of it and avoid the most common errors.
1. Find the right initial project for you
One of the most important decisions you will face when looking into starting your first project as a property developer is whether you are going to purchase raw land, land which already has planning approval/consent, or an existing building, perhaps for conversion of use.
This decision is a very important one to get right, so the following things should be taken into consideration:
– The property location
– How long you are prepared for the project to last
– Your existing property development skills (if any)
– Your tolerance for risk/reward
– How much capital you have and what financing you can obtain
– The expected changes in the housing market over the duration of the project
Land that already has planning consent will cost more than land without but will usually mean a significantly quicker project. Planning consent can take many months (if not years) and you will also need to pay for architect’s drawings and possibly a planning consultant.
2. Find a reliable and high-quality builder
The quality of the build and the finish are incredibly important so finding a reliable and high-quality builder is crucial. In looking for a builder, you should consider the types of projects that they work on, how reliable they are in terms of completing on time, and make sure that they have all the necessary insurance and certification. Ideally, you will want a firm that has been in business for at least 10 years and that can provide you with references from numerous previous projects.
3. Give people what they want
You won’t make any money from property development unless you build the type of properties that people want to buy. It is essential to do your research and establish both a target market and a product that will be desirable to them. This could involve speaking with local estate agents, running focus groups, or visiting show homes/new developments in the local area. This should all give you an idea as to what people are looking for and allow you to move forward with that in mind.
4. Form LL restriction
If you are a landlord, you may well have come across the Form LL restriction. This is a land registry restriction which is there to protect a property owner or landlord against fraud – specifically against a property being sold without their knowledge.
5. Be the same but different
Whilst it is important to offer what people want, as we discussed above, it is also vital that your property stands out from the crowd. Some cost-effective but unique features you could look at include distinctive rendering, unique-looking driveways, landscaping or even smaller decorative touches.
