Are You Thinking of Becoming a Property Developer?
I find myself having this discussion a lot. So, I thought I would ask around and share with you the best advice I could get. As you know, getting into real estate and becoming a successful property developer can be extremely rewarding, but do you have what it takes?
Create a business plan
Even if you’re 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.
You can download a number of free business plan templates.
There are a number of funding options open to property developers, from mortgages to bridging loans. Which one you choose will depend on 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.
Know your market
When on the hunt, it’s 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.
Look for things like unused 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 don’t 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.
Don’t get personal
Remember, this is not your home, it’s a property. That should be your mantra as a property developer – it’s not your home. Develop a property that is right for the market, not to your own tastes.
What about Personal Skills Needed To Become A Successful Property Developer?
Your property development business won’t happen unless you are highly organised. You also need to be systemised and make sure you establish processes for each part of your business.
Development is fundamentally a people business. Not only will you be working with a team of professionals, but you’ll also be wooing estate agents, lenders, and private investors.
Property development is a business, and you need to operate it as such. This means deploying management skills to run your business and being highly disciplined.
Any decision is often better than no decision, and in development, you’ll have a team of professionals to advise you. The problem can arise where the developer needs to make a difficult call, and they dither, hoping some silver bullet solution might suddenly arrive.
Once you’re up and running, development can be a job you do in your spare time. But you’ll need to put in some hard graft to get started. You’ll also need to be persistent. Great deals don’t grow on trees, and there’s no guarantee you’ll find one quickly. The good news is that this frightens off most of the competition, so if you know what you’re doing and you stick with it, you’re likely to be successful.
It’s easy to get disheartened. Great deals can be difficult to find, and projects rarely go as planned. The spoils go to the developer who keeps going.
Your property development education is the glue that holds all of the above together. Can you avoid making any expensive mistakes without getting training? The other thing that education gives you is the ability to see opportunities that other developers can’t see. And you’ll want that edge so you can get the best possible deals.
Mindset is key. You need to believe that it’s possible to succeed. Whatever it may be that you want to do, wherever you are in the country, whatever strategy you’re thinking about, that it all starts with the belief.