Many people dream of “flipping houses” for a living, having been inspired by television shows such as Grand Designs and celebrity developers like Sara Beeny. Property development, whether done on a small or large scale, can be an exciting and lucrative career.
The under-supply of housing in the UK is frequently discussed in parliament. It is estimated that around 345,000 new homes per year are needed to meet the demand in England alone. So, there is plenty of room for new developers to enter the market.
But how do you get started in property development? And what should you do to give yourself the best chance of success?
- Do Your Research
The lure of an escape from the nine to five and being your own boss is a big temptation for many people. But even if you have cash to burn, don’t rush into your first property development project. Not all developments make money, and the key to turning a profit is to do your research before committing to anything.
First, research the role. What skills and experience does a developer need? If you’re missing any of these, can you afford to take on help, or do you know someone more experienced who could act as your mentor or partner with you? Developers need to wear many hats — finance manager, marketing manager, project manager and more. Going solo may seem like a great way to keep costs down when you get started, but it could result in expensive mistakes and delays.
Next, research the local market and decide what kind of developments you want to focus on — residential? Commercial? Do you want to cater for families or provide deluxe accommodation for professionals? What is happening in the local property market? Are there any up and coming areas where you can buy property affordably and cash in as prices rise?
On most property development projects, the margins are tight and to turn a worthwhile profit, you need to select the right opportunity and manage it efficiently. All of which requires extensive research.
- Write a Business Plan
Don’t skip the planning stage in your eagerness to get started. The foundation of any successful business is a solid plan for the short, medium and long term. Your plan should set out your goals, the type of projects you will focus on and a property development finance strategy.
This can be a daunting task for someone just starting out, but there are lots of free business plan templates online, and engaging the services of a professional financial planner can be a savvy investment.
- Invest Time in Networking and Building Partnerships
The most successful property developers rely on an extensive network of professionals to complete their projects on time and to the required quality standards. Investing time in networking and building partnerships with experts you can rely on will pay off in the long run. You can’t do everything on your own. You need a reliable team around you.
While there are no specific qualifications required for becoming a developer, certain skills and traits are essential, including communicating, negotiating and networking. Start building a list of contacts from day one if you want your business to go the distance. Consider all aspects of your business. You may need tradespeople to complete building work, marketers to sell your properties, financial advisors to keep your budget on track and service providers who can offer your customers added value, for example, house part-exchange specialists.
There are plenty of opportunities to meet property professionals online and in person.
- Keep Your Eye on the Market
The research stage doesn’t stop once you have a business plan in place and start work on your first project. The property market moves fast, and if the last two years have taught us anything, it’s that life can be unpredictable! Any changes in government, the economy, employment rates and the cost of living are likely to have a knock-on effect on house sales and prices. The best developers carefully monitor the property market regularly. Only by doing so can they make sure that they are choosing projects with the best chances of success, buying supplies at the right price and setting a realistic budget for their developments. You should also hone in on your target market — are there any new developments planned that could affect the cost of buying property and its sale price? Is buyer demand for a particular area growing, and can you get in quick to capitalise on this potential? Subscribe to industry email newsletters and engage in discussion on Linkedin to make sure that you’re the first to hear about changes in the market that could — positively or negatively — impact your business.
If you’re planning to set up as a developer in 2022, take the time to thoroughly research and plan your business before diving in. Building a reliable network of contacts and keeping your eye on the market will set you on the path to property development success.