If you want to know how to become a property developer, look no further. This article contains several simple tips which might help you, but if you want an in-depth guide UKDLP offers two property development courses that will explain everything in detail. For now, though, let’s focus on the simple things you need to consider when asking how to become a property developer.
You want to know how to become a property developer? Well, this one word sums up the most important first step. Even with a bank that’s willing to give you a mortgage, you’re going to need a lump sum to get that first property. Often, people use the money from a redundancy payment, or sell their own property and downsize. You can get a loan, of course, but this is the least preferable option. If you do go down this route, make sure you shop around for the very lowest interest rates. If you are lucky, maybe your family or friends will be willing to help as well. Perhaps they will even want to partner up with you. This is a great way to spread the risk and workload of a development, but it will also cut your profits in half. Think carefully before deciding.
There are lots of different ways to buy property, but be aware of the different rules in different countries. A common way to buy property for developments is through auction. A property auction will often be for homes that need to be sold quickly, or have been repossessed. This means that the prices will be low (providing you don’t get into a bidding war). It also means that the properties are often not in the best condition, so it is vital that you check them out before you buy! You want there to be room for improvement, but really run-down houses can be a money pit.
This one is a bit of an old cliché, but it is important. Location is the main factor in determining the value of any property – much more so than the number of bedrooms and bathrooms. Since you are reading an article about how to become a property developer, it is likely that this will be your first property. You will therefore be looking for something cheap. The trick is in finding an area that is currently cheap, but is due to go up in value. There is no hard and fast way to determine this, but there are certain things you can look for. For instance, do some research and find out if there are any big employers looking to move into the area, or if the council has plans to revitalise the local town centre. Even if these things are a long way away, as they get closer the price of property will rise as the demand for residences goes up.
Renting and Letting
When people think about how to become a property developer, they usually think they will just buy a property and sell it on quickly. Sometimes this is not the smartest way to proceed. Imagine you buy a house in a cheap area, expecting the price to go up. It never does. Of course, you may have done up the interior, but this has only added a small amount to the value. If you sell the house straight away, all you’re left with is a measly bit of profit. However, if you rent the property out, the mortgage will pay for itself. This means you can wait much longer for the price of property to rise. If the house has multiple bedrooms you could even rent it to multiple occupants, and potentially make a decent profit against the mortgage.
This is one of the easiest ways to add value to a property, and is one of the first things people think of when wondering how to become a property developer. A lot of people may have skills that will make this easier. If you have knowledge of plumbing, carpentry, or any other practical skills this will of course help. Having a tight budget is the most important thing. If you spend more on renovations than you add value to the property, the whole effort is wasted. Keeping things simple is the best way to keep costs down. Don’t replace something if cleaning it will work just as well. Don’t tear down a wall unless it really needs it. A lick of paint and some cheap, neutral carpets can go a long way, so don’t go crazy buying expensive pattered wallpaper. If something major needs done, like re-wiring, and you don’t know how to it, hire a professional. But make sure to get multiple quotes for the work, and be prepared to haggle a bit.
Hopefully this article will have helped you to think about a few things and give you a clearer idea of how to become a property developer. For a much fuller guide, with tips on how to secure funding, negotiate planning and purchasing laws, run a project, and much more, check out UKDLPs property development courses.