1. Do your homework
Property development takes skill and is not as easy as everyone thinks. You can make a fortune, or you could lose one. You have to do your research thoroughly before you buy. Research the area, walk around and have a long hard look at the potential for the Property. Go to the local authority – talk to the planners about development possibilities. Check out all the former uses of the land.
2. Check out the title
Are there any restrictive covenants that will stop you developing, are all the services available and within easy reach. Do you need any-ones consent, can you reach the place without going over some else’s land. Would development affect or blight any neighbouring land. Are there any ondoing legal wrangles or disputes.
The best areas are often the most expensive and that will restrict profit. Good locations are often on the fringes of the better areas and spotting these is key in successful development. Being near schools, public transport and green areas is always a plus when it comes to selling a property.
4. The Financial Aspects
Do your sums and stick to them. Be ruthless when estimating costs and budget for contingencies. Know every outgoing down to the last penny and save every penny through harsh negotiation. Every pound you save is pure profit. Some of our most successful developers are known for the fierce negotiations on prices.
5. The right seller
When you are looking to buy a property you need to find a motivated seller, someone who will give you a good price because they really need to sell. Estate agents will have background information about why someone is selling. Companies in financial trouble, people moving abroad, getting divorced or going bankrupt all need a quick sale, which is when you will get a good price. Check out the tiny ads in newspapers and on the internet as motivated sellers often try to sell the property themselves. Remember, the more desperate they are, the better deal you will get!
6. Know who you will Sell to
Always have in mind who you will be targeting once you have developed. If you plan to rent or sell there is no point in spending a fortune on the highest quality fittings, but an owner occupier will want something more for their ‘ideal home’. If it is a family home, think about the décor. And importantly, it isn't about your taste, it is about what would appeal to the type of person who is going to buy it.
7. Avoiding common mistakes made by amateurs
Remember, property developing is not a simple matter of buying, building and selling there is much more to it. It's an important project and difficult, and if you get it wrong, it could potentially leave you broke for the rest of your life, or even bankrupt. Do not think that it is easy money because it most definitely is not. Property developing means adding value and developing value, not just sitting back and waiting for prices to rise. There are so many pitfalls.
8. The Right Team
You will need a team of advisers through the process so make sure you get the advisers who have the experience to help you avoid the mistakes. Solis Law have extensive legal knowledge and specialise in property development work so we are here to ensure the legal side is taken care of. You will also need the help of planning specialists, architects, agents and financial advisers.
9. Don't pay over the odds and think you will make it back in the long run
You make your money when you buy, not when you sell. Always protect yourself against the downside, which means, in a worst case scenario, can you still come out and survive - if not, stay away. One of our best clients lives by the motto "if you rush to buy then you’re in a rush to die", and they are right. There is always another deal just around the corner, so never be in a rush to buy. If you get it wrong, it becomes a headache and a money pit that can last for years so no matter how much you put into a deal always remember that if you walk away you will live to fight another day.
10. Be realistic and know your limitations
Plenty of 'experts' bang on about adding value, but the truth is there is always a limit to how much value you can add to a property. Be realistic about what you can do with the property and also what you are ABLE to do – pipe dreams do not make money. And because you can never know what will happen to your development, or the market, in the months it takes you to get your property back in estate agents' windows, it's imperative that you build in your best chance of making a profit by buying below the market price in the first place.