Your TV planner is full of shows like Grand Designs, Property Ladder and Homes Under the Hammer, and it’s not unusual for you to spend an entire Sunday afternoon wandering around furniture and homeware stores.
Yup, you’ve caught the property development bug, and you’ve got it bad.
Stories of people who’ve bought a dilapidated London flat for £30,000, put in a little elbow grease and then sold it on for a bazillion pounds have left your imagination running wild.
So over the past few years you’ve scrimped and saved to get a healthy deposit together, you’ve got an auction or two lined up, and you’re finally ready to get going with renovating a house for profit.
But here’s the thing – your favourite TV shows make property development look far too easy and attractive.
The reality involves a lot of hard work and money, for a very small chance of success.
With that in mind, we’re running through five things you need to know before you get started with your first development project.
#1: mortgage details
The first question you’ll be asked by the bank is whether you’re buying-to-let or sell, so have a good think about which option works best for you.
Research local property values, rental values and remember to consider the longterm costs associated with becoming a landlord (i.e. insurance premiums and the fact that you’ll pay tax on any rent you receive).
#2: buy for the right price
It’s easy to get caught in the excitement of buying your first property for development, especially if you’re bidding at an auction.
Don’t pay over the odds and never go above your budget, or you’ll struggle to make a profit at the end of the process.
#3: check the building condition
To guarantee you’re paying the right price, it’s essential you have the building checked for any major structural problems – particularly when you’re buying an older house.
Look to the experts for the likes of asbestos sampling, and have a chartered surveyor examine the property for water damage and other signs of physical wear and tear before signing a mortgage.
#4: know your market
Students or families? Young professionals or retirees? Know your market and develop the property accordingly, paying attention to your ideal buyer’s likely needs when it comes to things like bathrooms and bedrooms.
And bear in mind regulations regarding multiple occupancy, if you’re aiming to secure student renters.
#5: be patient
Although the goal may be to one day run a property development business fulltime, it’s unlikely you’ll have the capital to do that with your first project.
So over the next few months, be prepared to carry on working your current job whilst sacrificing all evenings and weekends to get the house finished. Be patient, though, and it’ll all be worth it.
If we’ve not put you off yet, then chances are you’ve got what it takes to make it as a property developer. Have fun and keep our advice in mind as you get started!