Becoming a Property Developer – You’ll Move House Frequently!
There’s a variety of reasons why someone might move house frequently. In a previous update, we looked at the shadowy and emotionally fraught world of parents upping sticks to get their children into the right schools. But for others, the motivation to move frequently may simply be a kind of psychological restlessness, a compulsive wanderlust that means they’re never comfortable in one place for too long. Others may have professional requirements and strictures, forcing their hand and making them move at certain intervals. This can certainly be the case for property developers, many of whom work by inhabiting a house, doing it up and then moving on at a profit.
What Does A Property Developer Do
A property developer buys a house/flat/building, renovates it, and then sells it on with the aim of making a profit. Some developers will rent out to tenants once they’ve completed the renovation. The process often entails acquiring a property that’s relatively inexpensive because it’s fallen into disrepair and needs considerable updating, with new furnishings, fittings, maintenance and repair work. As a consequence of the way many of them work, property developers can move house every year.
How Do Property Developers Make Money
Property development is a career generally only advised to those already in a stable financial position. It may make money, but it also requires money. It’s an expensive undertaking and, unless you have liquid assets, you may well need to borrow funds via bridging loans, residential mortgages, buy-to-let mortgages, commercial mortgages, unsecured loans or secured loans. However, once you’ve taken a shabby, dejected property and infused it with new life, there’s every chance that you can sell it on for a far greater sum than that with which you acquired it. However, there are risks. As a profession, it requires considerable commitment and if you don’t know what you’re doing and something goes wrong, you can end up saddled with vast debts or a property you can’t sell, and you could also lose your home.
First-time Property Developer
If you’ve never done it before, there are extremely appealing things about property development as a career. Foremost among these is the fact that anyone, at least in theory, can do it. There are no training or qualification requirements. If you buy a property and sell it on for a profit, you are, ipso facto, a property developer. And once you’ve done it more than once, you have a portfolio of renovated property that speaks of your abilities. However, there are costs both foreseeable and unforeseeable and cash has to be in place to help you deal with them. You must hire contractors, get structural surveys, pay fees to external agents, rectify structural problems like asbestos or subsidence and pay for maintenance and repairs. You will also need in-depth knowledge of the market, a grasp of how much other properties in the area sell for. You should have some idea of your target buyer/tenant. And then there’s stamp duty. In short, property development demands a huge commitment of time and money and, if you inhabit each house or flat while you develop it, it will necessitate frequent house-moves, which won’t be ideal if you have young children.
Property Development Courses
An array of property development courses can help you become more informed and these include everything from online to university courses. If you’re already in debt, then now is probably not the time to move into this career. Since property development requires the up-front outlay of buying property, plus the considerable expense of doing it up, if your finances are already under siege, you risk worsening your debt even more. A course, however, may help clarify whether this profession might suit you at a later date.
Worst Property Developer Mistakes
There’s a raft of pitfalls and bad decisions to look out for if you’ve set out on the property development path. Perhaps the most common one is buying in the wrong area. You may think you’ve found the next up-and-coming area and then turn out to be wrong. You may not take into account things like proximity to transport links. And if you’re an amateur property developer, remember that you’ll be competing with people who do it as their main pursuit and who have a highly developed eye for profitable projects. There’s also the risk that, without experience, you could fall victim to cowboy builders and get ripped off to such an extent that your project falls through.