If you have never tried it before, you may have wondered about making money from property development. Can anybody do it? Or do you need to be a particular type of person?
Well – making money from property development is perfectly possible. Many people have done it successfully and derived a great deal of enjoyment from it, as well as a good income. But of course you do need to know what you are doing.
So what will determine whether you can succeed in property development? There are some qualities which most if not all successful developers have in common.
You do need to love property. If the idea of property doesn’t really appeal to you, you won’t be able to put the necessary energy and enthusiasm into your projects.
You need to enjoy the actual business of buying and selling – not everyone does.
You should have a “nose” for identifying up-and-coming property hotspots. There are certain things which you learn to look out for, although none of these taken singly can be a guarantee on its own. If you are just setting out in the business, you won’t be able to afford places that are already hotspots, so you should be alive to those that could be next on the list. Areas that border on existing hotspots are often a good bet, as people who would like to live there but can’t quite afford it will buy houses as near as possible. You can find out from business plans at public libraries about places where new businesses are opening up.
You need to be able to make a good estimate of what a property will sell for. It requires a minimum of 20 percent profit to make a project worthwhile. You also, of course, need the ability to identify a market. If there isn’t a market, the most gorgeous property in the world won’t sell.
Ability to be honest and realistic. You need to be able to avoid getting carried away with dreams about the project and make sure you know exactly what you are taking on. Get advice from a hard-headed friend or colleague if necessary. You also need to take a very clear look at your current finances AND the finances of your project. Trim away any unnecessary expenses. If you have to live a more austere lifestyle for a period, tell yourself it will all be worthwhile in the end.
Be able to accept help and advice. Don’t be too proud. You can’t go it alone if it’s your first time. Remember there are plenty of people who have been through it and know what mistakes to avoid. And DO hire a project manager – an experienced one who can oversee the practicalities of the project and hire the right people.
Be patient. Don’t be in too much of a hurry – think things through. Don’t grab the first mortgage you are offered. Make a business plan and go through it with a broker or a financial adviser so you can be absolutely sure that you receive the right amount and the right product.
Property development isn’t an infallible route to success for everybody whoever they might be. But making money from property development is definitely possible if you’re the right sort of person and have the right attitude. Check through this list and see if you have what it takes.
Please note that the FSA do not regulate commercial loans or commercial mortgages