How to Make Money from Property Development

Becoming a successful property developer doesn’t always mean building houses and selling them; there are many investors who develop, adding value along the way, and end up never selling the property. Here, we will discuss various tips and strategies for profitable property development.

You Profit When You Buy, Not When it’s Sold

It’s essential that you pay the right price; any discount you get means more money in your pocket. If you pay a top price for a property, no matter how good it is, you won’t make much of a profit because your margin will be slim. Look for properties that already carry planning applications; their owners may accept a lower offer, and if planning is approved, you save again. You should also look to save money on things such as roofing supplies; the more you save on materials, the more you will profit in the end.

Location Isn’t That Important

We’ve all heard that real estate is all about “location, location, location”, but that’s not always the case. If you buy in the center of a well-developed area, you’re going to pay top dollar, and your profit margin will be low. Look for properties on the outskirts of such areas, which will eventually be part of them. Some of the most successful property developers buy land and buildings in seemingly poor locations, develop them, and when the area improves, they profit enormously. If you learn to spot these areas, there’s nowhere to go but up!

Do Your Research

You probably already know that property development is a risky proposition; you could make a lot of money, or you could lose it all and end up in debt. Before you buy, make sure you do your homework. Find out how much comparable properties in the area are selling for, and what fees are associated with purchase. When all that’s sorted, decide who you’re going to market to, how much you expect to make, and whether there’s enough of a profit margin to make the purchase worthwhile.

Find a Motivated Seller

This is one of the most important steps in property development; you need to find a seller who’s willing to negotiate on price. Most real estate agents have some background information on the seller and their reasons for getting rid of the property. Look for sellers who are moving, getting divorced, or going bankrupt, because they’re likely looking to make a quick sale.

Market to the Right Buyer

When developing a property, you should have a particular type of buyer in mind. If you plan to sell or rent to a college student, there’s really no point in spending a lot on high-quality fixtures, roofing supplies, and furnishings, but if you’re selling to a business professional, they’ll likely expect more. When developing properties, it’s not about what you like, but what your buyer is looking for.
Property development may seem simple on the surface, but it’s actually quite tricky. Get it right, and you’ll make a good profit. Get it wrong, and you may end up in debt for the rest of your life. It’s definitely not for the faint of heart, but if you do your research and are patient enough, you can reap the rewards.

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