The property market will often have its peaks and troughs over the years and short-term investors can sometimes suffer or prosper as a result of these fluctuations, but one of the key aspects of property developing is about buying and selling right, regardless of current market sentiment.
There are a number of top properties on sites like kingandchasemore.co.uk and no doubt some of them will have been transformed by their current owners to maximize their appeal and value.
Here is a look at some of the smart steps to follow if you want to make a success of being a property developer.
If there is one rule to always follow before starting any project, it is to ensure you accurately calculate your costs to evaluate whether a project is worth pursuing or not.
Before contemplating starting any property development project you should carry out a thorough evaluation of every financial aspect of the deal.
This means taking into account factors such as how much the property is presently worth and how that compares with other similar properties in the immediate surrounding area. You will need to make an estimation as to how much you realistically think your property is worth once the development work has been done and importantly, how much money you will need to do the necessary work.
Accurate and realistic figures are a vital component of any property development project and will be able to tell you whether a project is viable or not.
The vast majority of successful property developers either have a sound building knowledge behind them or they have a close relationship with someone who knows where to look for any hidden problems or issues with a property.
If you are interested in buying a property which is in need of renovation it is quite common for it to have a number of problems which are not immediately obvious to the naked eye or on the surface. Stuck windows and doors or cracks in a wall may not seem like much of an issue at first glance. However, as experts from Granite Foundation Repair in Arlington suggested, these could be signs of foundation issues, which could cost you a lot more than you’re prepared to pay for a property.
You simply cannot rely on an estate agent or vendor to declare every problem they know about the property, as there is a fair chance they might not know the full extent even if there were intent on giving you full disclosure at an early stage.
If you commit to buying a property which subsequently reveals a number of issues you were not expecting or budgeting for, this can have disastrous consequences for your finances, so make sure you get a professional opinion on any project.
Professional approach to budgeting
Another area which tends to distinguish the hardened professional property investor and the enthusiastic amateur who is just setting out in the business, is the discipline to produce a realistic budget and stick to it.
Property developing is no different to any other business in that you need to make sure you achieve a decent figure on your bottom line. This means that you have to be realistic about your costs at the outset and then vigorously resist the temptation to overspend on the makeover.
One example would be to put in a kitchen which may not be your own personal choice but one that works for the property and will appeal to buyers, but is within the budget you have available.
Always remember that you are developing a property for profit and that means not allowing your personal preferences or lack of purchasing discipline to create an overspend and diminish your potential profit when you are ready to market the finished property.
It is no coincidence that so many new and recently developed properties are decorated with neutral colours like magnolia and the decor in general offers a blank canvas for the new owner to work with.
Standard white bathroom fittings and other initiatives to ensure that your property appeals to as many buyers as possible, is the way to achieve a quicker sale and at the price you want.
As well as sticking to neutral colours even if they are not to your own personal taste, also resist the temptation to spend on gadgets and extras that will not add value to the property. A high quality kitchen is more of a selling point than state of the art technology installed throughout the house, so always adopt the no-frills approach if you want to turn a profit.
The property market might reward your efforts with a profit simply by way of rising house prices but it is best not to rely on a rising market to make you a profit, so do your sums and your homework to see if the project works.
If the market rewards you with a rise in values as well as the increase that you have created, then you are well on the way to making a success out being a property developer.
Malcolm Davies learned most of his property development skills from his father and their combined experience stretches over decades. Malcolm loves to share his ideas and research online to help inspire the younger generation on wealth accumulation. He mainly features on property, wealth and money related blogs.