Getting Into Property Development for the First Time
It can seem as though getting into property development is a sure thing.
Buy a run down house, do it up on the weekends and sell on for a profit, or don your landlord hat and reap in the rental yields each month.
Despite popular TV shows making it look simple, there's questions that need to be answered. How exactly do you go about getting into property development for the first time?
Getting started as a Property Developer
Many property developers maintain a full time job, backing themselves up as to have a regular income. You will need to assess the pros and cons for each company structure, depending on your circumstances and experience levels.
Setting up a company
When you're getting into property development for the first time, you will need to ask yourself if you will do this:
- As a sole trader
- As as business partnership
- As a limited company, etc.
As an example, setting up and registering as a limited company has its own advantages, such as being able to claim against tax for costs and materials.
Pros and cons
It may be worth noting that a limited company structure, making you a company director, could affect things you might not expect like child tax credits, general benefits, the way you receive your income and so on.
Each avenue needs to be thoroughly explored when you're getting on the road to becoming a successful property developer.
Once you have determined how you're going to move forward, be it on your own as a sole trader, with a partner or as a limited company, then the next stage of your journey is to research and understand the variety of development opportunities at your disposal.
Property Development Opportunities
There's so many angles you can take as a property developer or property entrepreneur. Infinite possibilities.
- What's your local area like? (amenities, transport links, economy etc.)
- Are you able to convert some run-down premises into a high yielding HMO development?
- Is there a run down office block in your town or neighbourhood which could be used as a commercial conversion and transformed into serviced apartments?
- Can you gain the planning in your area?
It's important, especially on your first development, to have clear direction and a road map of how you're going to approach your given opportunity and consider what exit strategy you're going to use.
The most popular development strategy for many first timers is the typical residential buy to let. This is where one buys a residential property with intent to let it out for tenants to live in.
Some larger properties can be made into HMO's (Houses with Multiple Occupancy) which means you double down on your income and generate multiple rental incomes each month.
You could also buy a house, renovate it, and sell it quickly to make a speedy profit, otherwise known as a 'flip', or 'property flipping'.
Think Outside The Box
Commercial properties can be purchased and made into residential properties. Other options include buying land to sell onto a developer, or buying land to build a development from the ground up. You could even build a second home on your property, a value adding extension or knock it all down and go bigger.
The doors open the more you consider your options and keep your wits about you. Empower yourself to make highly informed decisions by ensuring you're educated and equipped with the knowledge it takes to create and seize opportunities as opposed to sit and wait for them.
*To summarise: If you're getting into property development for the first time, you must have a clear idea of the type of development projects you would like get into and research potential outcomes and options thoroughly.
*Our Property Developer Entrepreneurs workshop is jam-packed full of tips on how to locate and source these kinds of opportunities. We're bound to say this, and we'd be right in saying, this is an essential course for anyone looking at getting into property development for the first time.
It might be said that no experience is needed to become a property developer. One simple ingredient is a critical; money and development finance.
You need to ask yourself whether you have the finances to get into property development for the first time.
- Do you understand enough about how the financials work behind a property development?
- Could you put down a big deposit or qualify for a mortgage?
- Would you be successful in applying for a bridging loan?
- Have you incorporated Stamp Duty Land Tax into your workings?
It can take 6-18 months to to see a visible return on your investment in the property industry. It's a long-term game. We can't stress that enough.
- Can you handle a long-term investment?
- Have you factored into your budget all potential expenses and scenarios?
- If the construction work took longer than expected, what are the financial ramifications of this?
- What if you needed more materials for construction due to inaccurate planning?
In order to make a successful start when getting into property development, it's important to understand the framework you are reliant upon. Finance is a huge part of that framework.
Tip: JaeVee provides 100% funding for your profitable property developments within the UK and project support throughout the entire development until the chosen exit strategy is achieved. We're changing the way property developers approach and ascertain finance.
*If you haven't done so already, sign up for your free developer account and take a look around to get the ball rolling.
When getting into property development for the first time, you must weigh up the risks. The are many different options to consider before you run in with your hard earned cash.
There's no better catalyst to get you started than our Training Academy.
We host innovative workshops offering you the most genuine, success-driven basis for your future as a property developer.
You can networking with other like-minded property developer entrepreneurs and become part of the revolution as we mould and tame the property development industry within the UK.
For me useful tips and information please visit our Blog
Recommended courses from this article:
- Property Developer Entrepreneurs workshop
- Property Sourcing Alchemy workshop
- Beginners Property Masterclass workshop