If you are looking for a side hustle to generate income, or something that you could eventually take to doing full-time, then property development is often seen as a good option. With there always being a demand for places to live, and fewer people being able to own homes, there will always be a rental market for the properties that you choose. Not to mention the chance to flip a home and sell it for a great profit. If you’ve got the time and resources to do this kind of thing, then it makes buying a home from you much more appealing.
But is there big money to be made from this? What is the best way to get into developing property? Here are some steps for beginners that are interested in real estate, so that you can make it a profitable business to allow you to work more flexibly or work for yourself.
First of all, you need to think like a property developer. When it comes to choosing the homes to buy or the places that could work as rentals, you need to think about the costings. If you buy a house at quite a high price, do it all up and renovate, and then only break even when you sell it, then it won’t have been an investment worth your time. So first of all, you need to think about saving money. All in all, your chosen property project should cost around twenty percent less than the current market value. Then, once flipped or rented out, you should be making around twenty percent on each property. This is a pretty good rate and will allow you to go on and do the same again.
You should also be thinking about renting property as you can often get good returns. It also means that someone else is paying the monthly deposit for you, and in most cases, leaving you with a little extra each month too. Having money making on your mind is going to be a good way to generate an income and will also help you decide if an investment is a good idea or not. Larger developments can often be a better money maker than individual homes, so would you consider that route too?
Who should you be talking to, to get your real estate business started?
If you want to take it one step at a time, then quite often you’ll be able to start a project alone. You will just need the time to research and do all of the math, to figure out what to offer and where the best places to invest in are. But if you want to turn your interest in real estate quite quickly into a business, then some of the following people could be worth talking to:
- Real Estate Agents: while they may consider themselves property experts, they aren’t really in a position to determine how much of a development a property would be. They can advise on costs and how much things would be expected to sell or rent for.
- Banks or Finance Strategists: no matter how much you have researched into an area or a property, you are not going to get very far in your property business if you do not have the money to buy the properties, or at least get a mortgage for them. So speaking to banks, finance strategists, and looking up the costings on a loan calculator, you can have a rough idea about how much you expect things to cost you. A strategist would also have an idea about how much monthly repayments would be, so you can calculate things like rental rates, and so on.
- Lawyers: you will need the guidance for a lawyer or solicitor to make sure that all of the house transactions are done legally. They are a legal transaction and so you do have to have them done correctly. You may have contracts to draw up too.
- Building and Construction Teams: unless you plan on doing all of the work and renovations yourself, then having a good construction team on board can make a big difference to how well the projects go. It can also help keep costs down if you have a reliable team on-board. It would cut costs even more to do it yourself, but that isn’t going to be a good idea if you have no idea where to start. From paving to interior design, there is a lot to think about.
Before you start on making offers on properties, building, or investing your money, you need to do your due-diligence, to make sure that it is going to be a property investment that is worth doing. Establish how much you can borrow, and all of the other associated costs. So in many cases, it is recommended to have approved money before you make offers or commence build. Otherwise, you could land yourself in some financial trouble or end up with a half-finished project.
Though there is always going to be demand for people needing places to live or to rent commercial property, if you get the right location, then you get yourself off to a good start. So think about the places that could work; the best one may not be that close to you. When you get the location right, you will always have demand for the property that you have, as well as house prices to stay stable or increase. If you’re in an unpopular location, there may be demand for people to live there, but when it comes to selling, you’re less likely to get much of a return on your investment.
So if you want to get into real estate development, then taking your time is key; don’t rush into anything, as it could end up being a bad decision financially. If you want to thrive and grow as a property mogul, than you need to have taken your time, done the research, and then got things at the right price, and kept your budget on target. It will make a big difference.