If you are considering taking on a property flipping business here are a few key things you will need in order to start.
One business that a lot of people have an interest in starting is property development. Inspired by shows about property flipping and realty, there is something very satisfying in the idea of picking up a wreck at auction, bringing it back to life, and selling it on for a profit. But what is the reality of changing your career to become a property developer? What do you really need to know if you are considering making a business of it? Here are the key things you will need in order to start a property development business
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1.Cash Reserves
There’s no doubt that your initial entry into property development involves high overheads. After all, you are going to need a deposit to put down on your first piece of real estate, plus there are lots of additional costs and cash outlays that need to be made before you will be able to realize a profit through selling it on. You will need to apply for either a residential or a commercial mortgage (if you intend to convert the property into a business premise), or you can use a secured loan or a bridging loan to cover the purchase price and raise money towards paying for development works.
2.Practical Skills
Of course, one of the most expensive parts of your business, that will eat into your profits, is paying for the labor involved to do the property up. To start with, you will be better off trying to avoid properties that need any structural work, as this is expensive and must be carried out by a qualified and licensed professional. Try to focus on properties that need mainly cosmetic work, and train yourself up to carry out as many of these jobs as possible. Although you will still need service from trades like plumbers and electricians, things like painting and decorating, laying flooring, and even tiling are all things you can teach yourself and therefore save more money, which means more profit when you come to sell.
3.Contacts – And The Ability To Network
Life as a property developer gets much easier once you have a network of great contractors. Finding people you can trust, who deliver on time and don’t charge the earth, is one of the biggest challenges. So start your little black book off – go on recommendations from friends and neighbors and ask to see examples of their previous jobs. You’ll need everything from landscapers to surveyors and reprographics to see the job through to success. Use your negotiation skills to secure a discount if you know you have other jobs in the pipeline you could give to them.
Photo by Milivoj Kuhar on Unsplash
4. Knowledge
Successful property flipping comes down to knowing the market – understanding what similar properties in the area have sold for recently, what the maximum value you could extract from a house is and the top price you can pay for a building and still make a profit, and what various renovation works should cost. So there is actually a lot of research work involved in starting a property development business! However, get it right and you could have a profitable and creatively fulfilling business.
