How to Make Money from Property Development

Property development requires a few things if you want to be successful at it and profit in a big way – you need to be thoroughly talented at the process of buying and selling property, you need to make sure you do not stretch yourself too thin as far as finances are concerned, you need to properly estimate the cost of each project, and you need to appreciate the scale of property development, instead of simply seeing it as a larger version of the DIY you do at your own home.

Start by zeroing in on the location where you want to work, and then proceed to study the market in that area – be familiar with the sort of homes that are in demand there, the sort of people who live there and their average earnings, the property prices in that area, etc. If you are just starting out, it is best to work in areas that are close to where you live, so you begin with familiar territory. In the light of this, build a profile of the property you will be developing – outline the location, the number of rooms, and the layout and features of the property. This can then be presented to real estate agents with a request to find out how much similar properties in the area have sold for recently.

Study the area to determine whether it will be profitable – usually, it is best to invest your time, money, and effort in an area where there are good schools, transport links, leisure facilities, and other perks like low crime rates, etc. It is best to target a particular group – e.g. first-time buyers, students, business professionals, or families. You will also need to assess your abilities – can you run the development, hire workers and contractors, ensure the building meets legal requirements, order materials, and spend most of your time on the site? If you, you are likely to profit from the business a great deal. Once the house is done up, you can hire a real estate agent to sell it. Throughout the process, there are several dos and don’ts you might want to keep in mind, in order to obtain maximum profit:

Dos:

- Evaluate your own talents and skills properly, and use them to the maximum effect. Buy the skills you know you do not possess, to ensure the job is done right.

- Keep a healthy contingency fund as backup. No matter how large a budget you set out, you are likely to end up facing extra costs.

- Invest in buildings which have sound structures at the base – buildings that are damaged at the foundations will require extreme makeovers and expensive repairs.

- Invest in making sure the property’s structure is sound.

- Pay an architect for professional design advice, to make sure the property is developed in the most attractive way possible.

Don’ts:

- Do not buy property without having a through survey and inspection done – if the property is a dead end which has no profit to offer, it is best to know beforehand, so you can avoid it.

- Do not stretch yourself out too thin as far as finances are concerned – this will only add to the stress, and put you in a vulnerable condition.

- Do not get too caught up in the repairs, and always keep in mind that your ultimate aim is to make money. Do not spend money on things that will not appeal to your target market.

- Do not spend on kitchens and bathrooms – this will prove expensive. Just make sure everything is functioning and in order.

- Do not bother to buy appliances – the buyers can invest in those themselves.

- Do not put money into flooring – a carpet is fine, as are regular tiles for kitchens and bathrooms.