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Property Development: How to Become a Property Developer

ProAktive www.selfbuildinsure.co.uk Property Development How to Become a Property Developer If you're thinking about becoming a Property Developer, it's important to look at some of the key considerations highlighted below. Selecting a Route To begin you should decide what type of property developer you wish to be. It is possible to change the route at a later date, but it is useful to learn from your first project. Key things to consider: » Will the final property be sold for a profit or rented out? » Do you plan on renovating a run-down property, totally transforming an empty building or starting afresh and building from scratch? Business Plan BUSINESS PLAN The next step after selecting a route is to draw up a business plan. Even if you are developing a property on the side of your regular job, you still need to look at this as any other new business. Your plan should include your basic aims and goals, specific breakdowns of finances, costs and potential income. It should reflect your knowledge of the industry and your research into the sector. Obtain Funding £ 3. £ There are a number of ways for property developers to obtain financial support, from mortgages to bridging loans. Which one you choose will be driven by your circumstances and the type of property you buy. Often if a property is run down and has little value, you might find it harder to get a mortgage that would cover the renovation costs. A bridging loan could help you in this situation. Other options include angel investors, family and friends or re-mortgaging your current home. Most of these funding options do come with risks and if payments are not kept up properties could be seized. Understanding the Market ? al ? Some areas are prime for property developers. For example, some places benefit from cheap homes and land, but enjoy a thriving rental market thanks to the locality of a nearby institution like a hospital or university. When on the hunt, it is also worth brushing up on local planning rules. One of the big costs often forgotten about when redeveloping a property is a project being shut down when an application is rejected. Find out what the local rules are, if there are any Conservation Zones or if the building is listed. Value for Investment Once you know the market, you should be able to estimate what most properties in the area are worth, what the rent would be on them and whether you can add value. A good tip is to never buy the most expensive house on the street as you will struggle to add value. For good deals, try property auctions. Bridging loans can help you in these situations. Or approach property owners directly. This works well if someone has a large estate with disused buildings that could be transformed. They might not have the money to do the work, so you could get the buildings at a cut price. Knowing when the right time is to buy and sell can also add thousands to your bottom line. And there is no need to rush into it. It might be that you have found the right property but do not have the finance in place or you were ready to sell and buy the next one, but the chain collapsed. Using a bridging loan in these circumstances can give you the breathing room and flexibility you need. Adding Value Value is key. This means finding the right property to develop. Look for things like un-used loft spaces that could be bedrooms, large gardens that can be sold off, empty outbuildings or whether the building could be split into flats. Then make sure you get the right people to do the right job. There are many things you can do yourself but do not think that just because someone on Grand Designs built their own home you can easily do the same. Plus, with electrical, plumbing and gas installations having a certified installer is key. And with many property developments, time is of the issue; get professionals to do a good job fast. Ask around for recommendations for reliable builders and do not pay off the books. It might be cheaper in the short term, but it will be costlier in the long run. Avoid Personalisation Do not forget this property is an investment, and not your home. Develop a property that is right for the market, not to your own tastes. ProAktive Self Build Developer ProAktive has been providing excellent insurance products for over 30 years. We are backed by Aviva, one of the world's largest insurers. In addition to our specialised self build developer insurance, we are sure you'll appreciate our swift handling of claims, easy-to-read documentation and helpful customer service. To find out more information please visit: www.selfbuildinsure.co.uk/developer-insurance ProAktive Doncaster: 01302 346 831 | Follow us O00 www.selfbuildinsure.co.uk

Property Development: How to Become a Property Developer

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If you’re thinking about becoming a Property Developer, it’s important to look at some of the key considerations highlighted in this infographic

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