Getting Your Property Development Right

The current economic circumstances the UK finds itself in are making it very difficult to successfully develop properties for profit. However, there are still some opportunities around for those who plan a project carefully and follow a number of key pieces of advice.

Know The Target Market

Some research should be conducted into specific areas to ensure that a profit is possible. Investors should be certain that a property can be sold or rented at a rate that will deliver a return on investment. The best way to achieve a satisfactory offer is to make the property appealing to the broadest market possible. It is important that as many demographic groups as possible are catered for when developing a property.

Many rental developments will be marketed to students in the area. It is important that these properties are large enough to cater for several students and have large communal living areas. First-time buyers are often looking for excellent public transport links nearby and gardens for young children. First-time buyers will often be stretching themselves financially and will want to move in with no extra expense involved. The best way to appeal to first-time buyers is by keeping decor simple and neutral. Professionals will usually have a more established financial background and will be looking for excellent facilities and well-appointed interiors.

Choosing the Right Property

It is vital that investors visit as many properties as possible in order to get a feel of what the average house price in the area is; estate agents will offer this advice but only from their own point of view. It is also important to look past superficial cosmetic details and search for the bigger picture. Wall coverings, colour-schemes and floor-coverings can all be changed relatively cheaply. It is important, however, to ensure that all the necessary building work is identified and costed out before a purchase is made. The purchase of properties that require extensive building work is fine, but the asking price must make renovations a cost-effective exercise. Experts should be asked for advice on issues such as electrical wiring and subsidence; these issues can be very expensive to rectify.

Is a Profit Possible?

Calculating if a profit is possible is a relatively simple process; however, investors must make sure they have included all of the associated fees as part of their costings. There will be fees from estate agents, solicitors and surveyors. The costs of borrowing, planning and stamp duty should also all be included in these calculations. The costs of decoration and renovation should then be added to the expenses to gauge the total projected cost of the work. There are many things that can go wrong during a project such as this. Every delay or extra task will normally entail a financial cost. It is good practice to add twenty percent of the projected cost to the total budget to cover unexpected contingencies.

A person’s first property development will undoubtedly involve some problems; however, the process will be a massive learning experience for people who want to make a career out of property development. First-time developers should reduce their risks to an absolute minimum; this can be done in a few ways. A property purchase should never be a gamble and a survey should always be completed beforehand. Investors should know their limitations and know when to ask for professional help before the work starts. This will ensure a realistic budget is devised and no nasty surprises arise during the project. Many people make the mistake of becoming personally attached to a development property. First-time investors should always remember that they are renovating and decorating a home to sell and not to live in.

This post was provided by Peter Andrews, property blogger and father if three in association with Rhodium – London’s most exclusive real estate search company.

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