The idea of having a career as a property developer is extremely seductive, respectable and tempting but seemingly unattainable for most of us. How does one break into the property market with enough skill to make a profit on buying and selling? The reality is that nobody becomes a successful property developer overnight, as experienced developer Tim Manning states: it takes time to gain the experience, skills and funds necessary to build a portfolio worthy of labeling yourself a developer. Here are 5 things you should know before you start down the path of property development.
- Build a property development business plan
When beginning any new venture it’s important to develop a plan that sets targeted goals of what you wish to achieve. Having an effective property development plan in place will ensure that you know what you want to achieve from this career move. Getting assistance from an experienced person in the industry will be a great help in this initial task.
- Buying to rent or buying to sell?
Before your purchase your first property you should decide whether your objectives are best suited for buy-to-sell properties or buy-to-let. If your plan is to buy and sell then this will allow you to quickly increase you funds in the short-term, freeing up your capital for more purchases. On the other hand if you decide to buy and rent your properties out then this will set you up for a long-term investment and a constant stream of income.
- Location, location, location
How many times have we heard that real estate is all about location?
That’s because it’s true. It’s crucial in property development to understand the areas that you’re investing in. While it may seem like a good idea to work in areas that are considered desirable and easy to sell homes in, a better option is to consider up and coming areas. These locations are often cheaper to buy property in and will considerably increase your profit over time. Look for areas that are under gentrification or significant growth. These are your best bets for making a large return on your investment.
- Time your moves wisely
Don’t get sucked into the excitement of bidding at auctions. It’s essential that property purchasing is not rushed into and you carefully consider the ramifications of your transactions. You need to spend time learning about the current market, real estate trends and the area you’re buying into. This is the best way to protect yourself from bad decisions. In saying this, once you’ve found a suitable property it’s necessary to work quickly. Securing the property, beginning developments and completing turn over will all gear you towards a successful transaction.
- Funding your career in the beginning
Being a property developer means dealing with large amounts of money, spending and losing are all apart of the industry. You need to make sure that you have set up a working plan to fund yourself. Until you sell your first property the majority of your capital will be tied up in your asset rather than cash. You will need to ensure that you can successfully raise the money that you need. Work with your bank’s dedicated specialists to decide on the best way to deal with your finances. They will have options available for property developers who are dealing with large transactions.
As with any career, most of your mistakes will be made with your first few projects so it is important to start small so you don’t ruin your property investment career before it has even begun. Don’t be afraid of mistakes either; this is how we learn, how we grow and how we accidently discover tactics that work.
