Property development is an exciting way to start your business. Thanks to popular TV shows, developing property is often seen as a get-rich-quick scheme. However, making money from property is demanding and may take more time than expected.
It takes a bit of risk and lots of hard work to break even in the real estate market. But the good news is that starting a property development business can be relatively exciting. It offers flexible working hours, and no formal qualifications are needed.
If being a property developer appeals to you, then this article will help you. We have outlined tips on how to become a developer with a decent income.
1. Choose Your Path
Property development comes in all shapes and sizes. Hence, you must choose the route you want to take. You may have plans to grow in the future, but you must have a place to start.
Do you want to develop residential or commercial properties? Will the final project be for rent or sale? Or do you want to renovate run-down properties and give them a new resale value?
Knowing what you want helps you in making strategic decisions. You can also understand the kind of loans to take or where to get funds.
2. Develop a Plan
After choosing your path, come up with a business plan. The plan will help you get the funding for the success of your business. It also helps break down finances, potential income, and costs.
Creating a business plan gives you a map of how to start your business and its growth projection.
There are several business plan templates you can download based on your goals and business type.
3. Get Your Finances in Order
Developing properties, whether from scratch or renovating old houses, is a hefty investment from the start. To get a sufficient amount, you need to assess how extensive the project is, the costs involved, how long it will take to complete it, and the projected income.
Due to uncertainties, create the best and worst-case scenarios and set aside at least 30% contingency if the cost spirals.
You may choose to get a mortgage based on your property plan. Buy-to-let mortgages are easy to get, though you’ll have to deposit 25% or more. When seeking finances, research the local market and pay attention to inflation, interest rates, and employment rate in the area.
4. Choose the Right Location
When it comes to property development, location plays a crucial role. Look for an upcoming community as the property will be cheaper with a great potential to deliver good ROI. You may hire a general contractor to advise you on what to avoid when developing property in a specific area.
Some places might need more work on ground leveling. The type of soil will also determine the location of developing a property.
5. Don’t Get Personal
Remember, this project is for a property and not your home. You should develop a property that suits the market and not your taste.
The Bottom Line
Property development is a lucrative business for both long and short term goals. Approach it with care and a good strategy, and you’ll thank yourself for starting it.
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