6 Essential Tips For Your First Property Development
The market for flipping houses is booming in the UK, with many budding developers looking to make a profit. However, things aren’t as easy as what is shown on TV, with many developers finding that there are more challenges and risks as well as slimmer profit margins.
That’s why it’s now more important than ever to have a robust plan in place when heading into this competitive market. In our guide below, we provide some valuable advice about how to navigate the path to successful property development, including some key considerations to be aware of.
Come Up With A Plan Of Action
Before embarking on your project, you must clearly define your objectives, as well as the type of property you wish to develop, whether it be commercial or residential. Use this time to plan your long-term financial expectations, the timeline, and the level of return on investment (ROI) that you expect.
It’s also crucial that you outline all potential costs involved in the development process, including solicitor, surveyor, and estate agent fees, as this will give you an idea as to how you’ll finance the project.
Choose Your Location Carefully
When it comes to purchasing a property, location matters. This doesn’t necessarily mean building the property in a wealthy district since this will reduce your profit margins. Instead, consider the outskirts of a reputable area or somewhere within commuting distance of the city centre.
Regardless, you should always take into account the type of buyer you’re targeting. As an example, families will want a location close to green space and schools, whereas young professionals will be looking for somewhere with excellent transport links and local amenities.
Obtain A Property Development Loan
Without the right development finance, your project is at risk of stalling or being abandoned. There are various costs involved during the property development process, including acquisition, construction, and refurbishment fees.
To overcome these challenges, look to acquire property development finance. Fortunately, these lenders are much more flexible and can offer tailored solutions compared with traditional creditors. There’s no drain on your cash flow, with interest added to the loan balance to be paid upon completion of your project.
Assess The Credibility Of Your Builder
Finding a builder who is both efficient and reliable is of utmost importance and will be a determining factor in a successful property development. The best way to scope out a quality builder is to check their previous work, asking for references from past clientele.
A trustworthy team of builders will also stick to their original quotes, avoiding working longer than needed and ripping you off. Prevent this from transpiring by asking them to sign a fixed-price contract. Should they refuse, take your business elsewhere.
Get As Many Quotes As Possible
Obtain quotes from multiple contractors, suppliers, and service providers to accurately gauge the costs associated with your project and pick the best candidates. Thoroughly review each quote and make sure all expenses are accounted for, including permits, labour expenses, and materials.
From this information, you can then prepare a detailed budget that aligns with both your financial resources and project objectives. Maintaining a well-prepared budget then enables you to identify cost-saving opportunities, mitigate financial risks, and make informed decisions throughout the development process.
Make Sure The Law Is On Your Side
A common mistake that first-time property developers face is failing to stay on the good side of the law. If you are set on finishing your project successfully by a certain date, then you’ll want to avoid setbacks and delays from expired certifications or lack of permits. Even worse, you may be slapped with a hefty fine or find your work ceased altogether.
Prioritise legal compliance from the outset as this will place you in good stead. If you lack experience in this sector, consider consulting with legal professionals with expertise in real estate. The laws in this industry can be complex so you’ll want someone who is able to navigate the requirements and ensure your project remains compliant through each stage of development.
While the UK property market is doing better than ever, high competition means first-time developers need to do their research first in order to succeed. From crafting a detailed plan of action to securing the right finance and vetting builders thoroughly, following these steps will improve your chances of achieving what you set out to do.
