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Lots of people are turning to property development as a way of investing their money, hoping for a good return, whether that is through renting out property or developing and making a profit from a quick property sale. However, many property developers underestimate the large costs involved and often find themselves in deep water with much unfinished work and no contingency for unforeseen problems. Developing is certainly hard work, but can be fun and give you a great sense of achievement once it is completed, but it is incredibly important to fully research your development plan with regards to costs and timescale before starting anything. This will help you to organise your workload but more importantly ensure you have the funds available to cover all finances necessary to complete the development. There are many factors to consider as well as the basic costs of materials and labour, including fees, furnishings and a contingency to cover you for anything that may go wrong, unexpected problems or delays that could cost you in terms of time.
When you create your budget, it is a good idea to get independent financial advice, which may cost you but it is certainly a good price to pay to ensure everything is covered and you don’t risk making a loss. There are lots of Independent Financial Advisors available, but it is important to make sure they are regulated by the Financial Services Authority. They can help with all financial details regarding your plan for development including help and advice for gaining a development or buy to let mortgage. Most standard mortgages require you to own your home for a certain length of time before selling, otherwise penalties may be payable for selling early. Mortgages for the purposes of development are slightly different and often incur different types of fees or interest to cover a loan over a shorter term with a view to selling property fast and making a profit. So when looking into getting a mortgage, you need to research the market and consider the different types of mortgages and costs before committing to anything. If you have a property or an area in mind that you are looking to purchase, then you should also research house prices in the area to make sure your investment has the potential to make a profit. You could end up spending more than the capped value of your property, so be sure to do your research.
You can also get advice from local estate agents or research the area online to find out if the area suits your plans for development. Any information you can get is likely to prove extremely valuable, helping you to prepare and carry out your development and ensure a good return on your investment. You could also consider employing a Project Manager, which could help to implement the smooth running of the project but this could also eat into your budget significantly so consider the size of the development and whether a Project Manager is necessary.
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