Successfully Getting On With Property Development

Property development has become so lucrative that the number of people wanting to become developers has sharply increased over the last ten years. The trend is driven by a growing interest in home improvements and a rising market. The recent slowdown in prices has led to many bargain hunters picking up cheap properties and plots of land for future development. These astute developers are well aware that labor prices have fallen significantly recently which helps to keep build costs to an absolute minimum.

For a budding property developer, the current market presents a promising opportunity.

Why invest in property development

Property developers often enter the market due to the following advantages:

- You can save money as your development project can be purchased at 20% or more below market value.
- You can earn significant profits in a short space of time.
- You can rent out the property after development to take advantage of a strong rental market.
- You are often entitled to significant tax benefits.
- You can improve your long-term investment prospects and greatly increase your chances of expanding your property portfolio in less time.

How to be a property developer

Entering the world of property developing can be as simple as buying a piece of land and erecting a house on it or demolishing it to have a new one built. However thriving as a property developer is another story. Research, time, patience and the readiness to endure calculated risks all play important roles.

Factors to consider

Performing due diligence and doing your homework is the essential first step. While knowledge is power, educating oneself by performing your own research makes a big difference. Estate agents and surveyors hold sound local knowledge and are therefore invaluable sources of information.

Make sure to look for an area that’s experiencing a growth stage – one where the population is growing and the demand for rental homes is robust. Proximity to schools, shops, access to good transport links, shopping and facilities will make a property more appealing to tenants and buyers making it easier to sell.

Buy cheap. Many property developers have made enormous profits by purchasing cheap properties and then reselling them for a profit, possibly renting them out temporarily. The secret is to find distressed sellers who often need to sell their property as fast as possible. Distressed sellers – which include recently divorced people and those looking to emigrate overseas – are sometimes open to prices 20%-30% below the true market value. You can often find them by advertising your services or by delivering leaflets to the people in your local area.

Before making any commitment to buy, make sure to speak with the local council and ask about zoning limits and if you can subdivide when needed. Potential drawbacks that will hinder your building plans should likewise be taken into consideration.

As with any potential conversion, you’ll need to possess a robust knowledge and an understanding of building regulations and of your property’s architectural possibilities. If you’re renovating a property larger than a house, you’ll more likely need a team of professional tradesmen. More importantly, you’ll need to plan for the services they’ll be rendering. The group will usually consist of an estate agent, a quantity surveyor, an architect and an engineer.

Becoming a flourishing developer in the area of property development lies chiefly in your diligence in performing the prerequisites required for the foundation of a sturdy business. Then if you can effectively manage your developed property and attract a steady stream of interested buyers or tenants, then it’s highly likely that you’ll be performing well in this area.