Becoming A Property Developer
Thanks to the rise in success stories like the Panayioutous’ and because of popular TV shows like Homes Under The Hammer, it’s often perceived that becoming a property developer is a get rich quick scheme and will make you your first million. However, attaining a positive ROI and becoming profitable isn’t as easy as it may seem. Yes, getting underutlised or cheap property, renovating and refurbishing the space, and then renting or selling them for a profit is definitely part of the process, but the truth is it takes a lot more to become a successful property developer, especially in today’s economy. Luckily, there’s 5 simple steps that you can take to ensure that you’re on the right track…
- Develop A Property Development Plan – Your first starting point is to have a plan of action for your short term and long term goals, here you’ll want to decide whether you want to buy-to-let or buy and sell. Buy-to-let is often a long term strategy and allows you to build an extended property portfolio, whereas buying and selling is a shorter term strategy and offers a quicker ROI (return on investment). Your decisions should be based on the volatility of the property market, the location, the property and area’s potential and always the rental yield and ROI.
- Decide On Location – Picking the right location is crucial! The one mistake that amaeteur property developers make is choosing property in an area which is already popular. To be a true sucessful property developer is being able to spot the potential in an area, like Andreas was able to with East London. This is how you make the most profit! Try to find areas which are near to newly gentrified areas.
- Buy On The Right Price – The golden rule in property development is to make your money when you buy – not when you sell. You’ll want to pay as minimal as possible for a property to maximise profit.
- Ensure You Have The Right Finances in Place – Becoming a property developer requires money, and until you’ve sold your first property you’re likely to have very little money to play with to build your property portfolio. So, you need ensure that you have the necessary funds in place. If you have any uncertainty banks have property finance experts who’ll be able to give you any advice you need and point you in the right direction.
- Develop For Y0ur Target Buyer – It’s important to stay focused! You must remember that you’re renovation is not for yourself, it’s for your business. You are not doing up your own home, so you must renovate for your target buyer or tenant. Use your renovation budget to guide your decisions in a fast-moving market.