Becoming a property developer was quite the fashion back in the noughties.
The housing market was buoyant, people had more cash burning a hole in their pocket, and bricks and mortar seemed the safest avenue down which to travel in terms of a surefire investment. Fast forward ten or fifteen years and the art of flipping a property has become a more difficult beast to tame.
The housing boom is no longer apparent, and property developers need to work a lot harder to increase the value of their pads and outperform the market. Once upon a time you could buy a home, sit on it for three months doing nothing to it, and then resell for a five-figure profit. These days are long gone. Property developers now need a bit more financial astuteness and a thorough understanding of how to add value to their humble abodes.
Worst house, best street
The old adage of purchasing the worst house on the best street still holds true. Location is everything, and if you can purchase a fixer-upper on a highly desirable road, you should already be ahead of the game.
With a high-quality renovation that still sees your total investment below the ceiling price for a house of similar dimensions on your road, you should be able to sell for a profit. People will forego space if it means living in a more desirable area. Think quality over quantity when it comes to square footage.
Get in early
Try to locate the up and coming areas. Network with local estate agents and try to source properties in a patch that you know well. Don’t venture halfway across the country to buy a townhouse just because it looks cheap. There will no doubt be a reason for the low price. Consider the ripple effect. Get out a map and highlight the premium postcodes. The chances are that when people have finally been priced out of the market in these locations that they’ll venture to the neighbouring postcodes and so on. If you can get in early, purchase some housing stock and bide your time, you could be onto a profit.
If this is going to be your main source of income, you need to make property development work for you financially from the purchase through to the sale. When selling a property, consider veering away from the high street estate agents that charge commission and testing the waters with an online-only agent saving you thousands in the process. Source a team consisting of tradespeople, a property lawyer, agent and home loan lender for every property transaction.
Doing up a property and renovating it, so that it’s fit for sale involves a fine balance of achieving the highest quality finish but at the best value. Don’t scrimp on the details and ensure the bathrooms and kitchens are of top quality – these are the rooms that sell houses.
Get your calculator out every day and keep totting up the figures to ensure that you’re realizing the maximum investment from each property that you purchase.