To be a property developer, you must understand first what property development is about. This will help you to arm yourself with all the useful information and know exactly what you are getting into. Property development involves an array of activities right from buying property or land to developing it into something that you desire for rent or sell.
It is a continuous process that aims at meeting the meets of the society. While this can be developing quality infrastructure including residential homes to high-end office buildings, it can be a simple yet complex process. This article helps you to understand how to be a property developer.
How To Become A Property Developer
1. Do Your Math Well
It is with no doubt that property development is a highly lucrative business venture. However, it is also a risky venture. Therefore, you need to do your math well before you make any move. Find out all about the type of property development you want to get into. Therefore;
- Determine the style of properties that are more likely to sell in the location you are interested in.
- Ask around about stamp duty, fees and searches and what your refurbishment will cost you.
It is equally important that you know who talk to. In property development, you will work with different professionals. This includes;
- Development and project managers.
- Construction managers.
- Urban designers and town planners among others.
Therefore, to get started smoothly, define your needs and know exactly whom to talk to. Property strategists, for example, are a significant point of contact in your venture. They carry out a thorough research on location, the development of the property and even negotiate for your purchase. They are the people who help you to understand the dos and don’ts of property development. Therefore, a great way to start is by doing your math, evaluate your needs and get the right strategists.
2. Have A Plan
A business property development plan is crucial. Whether you want to become a part-time or a full-time developer, you need to make wise and informed decisions by working on a good plan. Have a sensible and realistic plan.
When designing a business plan, have all the resources in mind. Determine whether you will be an employer or you will outsource certain services. Start out on the right foot by having the right and functional plan.
3. Understand Your Market
Understand your target market and get an upper hand by closely monitoring all activities. For example, if you are interested in housing, you will need to monitor a number of factors including;
- Employment in the area.
- Interest rates.
- Inflation rate.
- Demand as well as supply.
- The feel-good factor.
These prime factors will help you to develop the property that will give you the best return on your investment.
4. Determine Your Strategy
In your business plan, one of the most crucial targets is your exit plan. Are you buying and developing the property to let or you are buying to sell. In most cases, buy to let gives you a long term strategy. You will be able to become a property developer that works on extended development when you settle for this plan.
Buying to sell on the other hand is a short term plan. It quickly increases your return on investment or capital. This means you will be more dependent on prevailing market conditions. It is, therefore, a risky yet instant source of capital.
5. Keep In Mind Rental Yield
Once you have determined strategy, you need to focus on rental yield as well as your possible return on investment. Rental yield is a calculation of an annual rental income against the overall value of your property. A good gross yield is about 10 per cent. Therefore, if you are aiming at buy to let, focus on a plan that will give you good value or return of 30 per cent.
6. Location Is Key
Location is arguably one of the most common phrases that you need to get used if you want to become a property developer. Do not invest blindly in a location that is just deemed to be excellent or lucrative. Go an extra mile to do your research and identify a spot that offers the best chances of making profits. Areas that are growing, urban renewal or locations that have the potential for investment are the best to go for. Do your research well because location plays a signification role in determining whether you will thrive or fail in the field.
7. Carry Out Thorough Research
Do not rush in making your decisions. Estate agents are experienced in the field, and they know how to entice buyers. Do not miss out on the best deals by settling for the first option you come across. Research well, know your market and the entire area. It pays to find an ideal property and in a perfect location.
Once you have what you need, move quickly and turn it around. The sooner the better because you have the potential of realizing the best profits. Thorough market research helps you to buy property at a sensible price and strike the best deal when selling it.
When doing your research, take note of infrastructure and facilities that are more likely to add value to your property. This includes accessibility to good roads, schools and other social amenities.
Property development can be costly. You need a good capital. Evaluate your funding options and settle for a plan that matches your needs. From bridging loans, your savings, family contributions to mortgages, ensure your funding will not let you down. Most importantly, ensure it will give you the desired value when the time comes for you to let or sell the property.
9. Ensure You Develop The Property That Is Fit For Purpose
Property developers face tight competition. For this reason, you need to ensure you develop a property that is fit for purpose. Focus on;
- Safety and security requirements.
- Make your property beautiful and habitable.
- Ensure there are the best home security and basic needs that tenants would be interested in. This means ensuring doors can be opened and locked well, intruder alarm systems, a secure parking lot and even a guard response system.
With such security details, tenants or prospective buyers will feel safe and they will want to rent or buy your property.
10. Customize Your Property
It is wise that you know how to get into property development by tailoring your services to what your target audience will be interested in. Whether you want to rent or sell the property, it is worth working on a high spec property. Tailor every aspect of your property for your buyers.
Ask yourself is this property the dream residential place for your clients, say students or the working class? Most importantly, have a solid grasp of your finances and ensure that your property has what potential tenants or buyers are always looking for.
11. Get The Best Deal
When buying property to develop, try to get the best deal. Do background research to determine;
- Value of most properties in an area you are interested in.
- Ask about rent.
- Determine whether it is cheap to buy or build a house in the area.
A good tip or a rule of thumb to becoming a successful property developer is to avoid buying too expensive houses. Often, you will struggle to renovate it or to possibly add value and get a buyer who is willing to spend a good dime when the time comes for you to sell it.
For the best deal, approach people who are interested in selling property or property owners. Similarly, know when the time is right to buy the property. Most importantly, buy when your source of funding gives you the flexibility you need to buy and develop the property.
When buying property, always try to cushion yourself against any downside. Avoid buildings with structural or design issues. Make sure all your legal are in place, check for gardens and buy in the best place that will allow you to build and sell at the best possible value.
12. Know How To Add Value
Value is fundamental when it comes to property development. Once you have purchased a property, look for features you can improve. For example, you can include a garden area, a swimming pool or even convert a loft space or a garage into a beautiful gazebo.
If you are not sure of how to enhance the property, you can consult professional designers. They will offer the best advice on how you can add instant value to your property.
A rule of thumb is to develop the property that is not only ideal but also right for your target audience or the market. Ultimately, your goal is to buy and develop what can give you the best return on your investment. Therefore, avoid getting personal but have the needs of prospective clients at heart when developing the property.
13. Get Real
You need to get real for the best results. Property developing is all about making difficult and important decisions. If you get one step wrong, you can potentially get into huge losses. Get real, add and develop value in every step of the way.
Add a professional touch to your property by hiring the best contractors in the market. All Division Building Ltd are reputed contractors in Kent that can improve the value of your property through the quality kitchen and bathroom installation services.