How To Start Property Developing…
Firstly you will need money, lots of it. When you’ve got that, you can think about the following.
Size of the PropertyThis depends on your budget and your experience. Most developers start small with a flat or small terraced house. Some then stay small but develop several at a time. Some move on to bigger, one off projects. Some drop out, with their fingers burned!
Not only relevant to its selling potential, (which you don’t need me or young Kirsty & Phil to tell you about) but a location relevant to your ability to get to it, especially if you are doing work yourself. If its 25 miles away, you can’t just pop round to “do a couple of hours” before dinner time.
Generally, sticking on an extension will make you a good profit and the smaller the original property the more relevant the extension becomes. A “2 up 2 down” terraced house with a 2 storey rear extension providing a bigger kitchen and a bathroom upstairs, is a winner, particularly with first time buyers.
(They were brought up in a house with the bathroom downstairs, they want to move up in the world).
If there’s no room for an extension, a loft conversion in the same property, providing a new master bedroom and en suite, will have nearly the same effect on buyers and therefore your profit.
Doing both in a small terraced house, particularly if it’s in a “poor area” probably isn’t a good idea. Buyers wanting a 3 bed house might not be that desperate. They might also want the other things which are associated with “moving up the ladder”, a bigger garden, a “cul de sac”, or off street parking for instance. An “over extended” project, might just become your own personal millstone.
(Did you know that cul de sac is French for “bottom of a bag”? I know we English dearly love the French and all their jolly little phrases but I bet they didn’t pop over to ask us what to call their dead end streets when they were short of a bit of inspiration)!
Just because a family adds an extension and loft room to their own property, doesn’t mean it’s a good idea. They probably have specific reasons for doing so. They aren’t necessarily doing it to make money. They may eventually get back what they spent, plus the usual chunk for inflation but that’s not profit that’s just the passage of time.
If everyone in the street is doing it though, ask yourself why? Maybe there is an opening! If the street is also the “right one” for that area, you might just be on to something.
Who will buy it?
You have to know your market. You have to know what other houses in the neighbourhood fetch and the type of person buying them.
We’ve mentioned over development and pricing yourself out of the bottom end of the market. What if you have moved up a notch and want to take on a big semi in a good area. These for me are the “pay dirt” of development properties. Ideally you will get it as an estate sale, which means unfortunately, that someone’s mum has passed away but you get an antiquated house with plenty of space around it, which is just asking to be ripped apart and developed.
Your eventual buyers will be established, they will have an expanding family, they want respectability, they want to think they have “made it”.
And you will sell at absolute top price, if you can also give them what they didn’t expect at all, a “wow factor”.