Maybe you’re already a Property developing tycoon, or maybe you’re a small fish in the big game. Either way, I’m sure you’re wondering what else you could possibly be doing to earn money on property development; especially if you’ve been doing this for a long time. Well, the answer is probably a lot. You might have been making money, but that doesn’t mean you’re doing everything the way you could be doing it.
The housing and rental market is a huge and successful industry, but it’s also a complex one. If you do something that works, you can make enough money to live comfortably for the rest of your life. However, if you make the error of poor judgement, then you could stand to lose more than your initial investment. It’s either the best investment you ever made…or the worst. Depending on how smart you are about your decisions, costs and the property on which you invest.
The key is to figure out what you have to do to be one of the lucky ones who gets the successful property development business of their dreams. Despite the unpredictability of movements in the market, I’m going to let you in on a secret: it’s not quite so much a case of luck as you might think. Here are some brilliant pieces of advice that might help you start to flourish.
Property development, while brilliant on its returns if you make the right call on the right property, is very expensive for the developer to start with. You need to be ready to invest in the right property, of course, but the very first step needs to be the attainment of a nice sum of money to deposit.
Saving up for the first down payment, or for the mortgage you’re going to need to pay for the property, is something you should dedicate some real time towards. There’s no rush, and it’ll give you time to really think about your options in terms of the kind of property you want; both in terms of location and price range. Quality is what you make it, so don’t go overshooting your budget just because you saw an expensive, beautiful property. Losing money before you’ve even started is a terrible way to begin a property business.
Flats are the way to go.
Property development as a whole can be high on returns, if done correctly, but if you want to truly be successful and take the route which offers the greatest likelihood of success, then flats are a more favourable investment than houses. Obviously, the market changes all the time, but investors have suggested that flats return a much higher rate and are a safer place to begin. If you’re feeling a little overwhelmed by the complex costs and legal aspects to consider through property development, then it might help to start with a property that you can count on to offer your entire investment and more in return.
This is a game of calm, deliberate decisions.
Greed and impatience will get you nowhere as a property developer. Many have learned that the hard way through investing huge sums of money into ideal properties, thinking that this is enough to bring in real returns. While an incredible, luxurious, or highly expensive property will be very attractive to the richer market of clients, that doesn’t mean you will make big returns on it. Remember, the market can be unpredictable, and what might have been a great property when you bought it last year could have a terrible rate next year.
Patience is key. Think about the long game before you make any kind of investment. Talk to letting agents and ensure that you’re not going to end up in a position where you have to sell the property quickly, at any price possible, because it ended up being a terrible investment. You’ll end up losing a huge chunk of money and a huge chunk of your time on an opportunity which could have been brilliant if you just took your time and did things slowly. It’s better to be prepared now.
Organize your finances.
This might seem like a dull way to spend your time, especially if you’re doing quite well for yourself from your properties, but this is exactly why you need to organise your inflow and outflow of money properly, much the same as any other business. Using a capital gains tax calculator, for example, will let you know how much money you’d stand to have taken out of your overall investment if you were to sell the property on. This is just one of many important things you need to consider before you go making any rash decisions.
Don’t cut corners.
We all know about cowboy builders, but think about it; are you any better if you cut corners in your property? I’m not saying you have done, of course. My point is that cutting corners on costs doesn’t actually make you more money in the long run. Maybe the cheap flooring, the old and knackered oven appliance, or the rotting cabinet all seem like brilliant investments from a cost standpoint, they won’t seem like such a good investment from your perspective when you turn away potential tenants.
Worse still is the possibility of some faulty (or even a knock-off) fixture or appliance going unnoticed, and then emerging at a later date. If a tenant is displeased with the state of the property and feels you’ve hidden an integral flaw which affects their day-to-day life, you could be facing some pretty hefty costs from a legal standpoint, depending on the specifications in your contract.
To avoid any sort of legal headache, or simply a lack of tenants who even want to stay in your properties in the first place, then pay that little bit extra now to make much more money in the future through the continuous, never-ending stream of tenants wanting to rent your property.
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