These days many people are trying to get into the property market. Land and property value seems to keep climbing around the world, property shows are huge, Home & Garden shops and magazines are popular, and everyone seems to want a taste of entrepreneurialism. However, property development is difficult, costly, time consuming, and risky. Here are some tips on how to negate those factors and begin the property game.
To develop property you’re going to need money, and quite possibly a lot of it. A way to ensure financial stability is to take on a venture partner.
If you’re a first time developer then you should look into an existing property development business. They have been doing this for years, they have the financial stability and they give examples of previous developments of thiers. Partnering with a property development business may reduce your autonomy and it may cost but it’s the safe route for a first time developer, and it is a way of getting into the development game.
I could’ve written it three times, but that’s too predictable.
Buying in a market that is quickly growing is also very predictable. If people are already aware that the market is shooting up then they’re aware that they can charge you an arm and a leg for the property.
It’s not necessarily a bad decision, but not researching is definitely a bad decision. There are areas that research can reveal to be approaching a growth in the market. Buy before the boom, not after.
Buy to rent or buy to sell
Are you buying property that will be developed into a rental, or will it be developed to sell? One is a long term investment while the other has a faster turnaround and therefore a faster return on investment. To decide on your plan of action you should calculate your rental yield: How much can I rent it out for, how much will I spend in property management, will I make a profit?
Don’t just assume that a rental results in profit, because that can be very far from the case. Property management – both the service, and the money you supply to maintain upkeep – can be very expensive and it may be smarter to sell immediately. Alternatively, it may be a great time to rent a property and a great time to sit on your investment.
Do some calculations first.
Tailor to demand
Do not develop property that you like or that you consider to be universally liked without ensuring that it is in demand in the area.
You may create great family properties in an area that it typically filled with singles, professionals, or young childless adults. You may also create a fabulously modern property that suits American tastes but you’ve built it in an old english county.
What do people in that area want? Find it out, then build that.
The common phrase “Timing is everything” is so very true. Timing applies, in this case, to all of the previous tips provided. Take your time finding the right venture partner, choose the right time to enter the market, spend time calculating whether to let or sell your property and make sure the timing coincides with the market, and lastly, get the property onto the market while the demand is still the same as it was when you bought your property.