Do you want to be a property developer?

Do you want to be a property developer?

14th Apr, 2016

With government schemes such as Help to Buy and Funding for Lending offering greater access to finance, this could be the perfect time to get started. Here are our top tips for property development success:

Develop a business plan

As with any new venture, you’ll need to set out with a clear idea of what you want to achieve and how you intend to get there, whether you’re going to work on it full time or as a side project. 

Buy-to-let or buy and sell?

Buying and selling gives the potential for an instant return on your investment, though it is a riskier option as you will be more dependent on market conditions. Properties sold incur capital gains tax with an annual exemption of £11,100. Buy-to-let enables you to build up a property portfolio with a view to replacing your current salary. HMRC considers rental income to be a  salary, so it is treated like income tax.

Always consider the rental yield and return-on-investment

A buy-to-let developer will want a a rental yield (annual rental income compared with the property’s value) of 10%, this can increase hugely with multiple tenants. If you’re selling be prepared for a volatile market and aim for a minimum return of 30%.

Timing is crucial

Once you have found a suitable property for your portfolio, act quickly if refurbishment is required so you can start to make a return on your investment.

Tailor your developments for your buyers (or rental tenants)

It’s essential to adapt your development according to the area you’re buying in. Are you catering for students in Huddersfield town centre or families in Holmfirth? This insight will help you to decide how to decorate your property. Think about potential buyers or tenants and tailor your property to their needs. Use your money wisely when it comes to interior design so you can maximise on the return from your investment. 

And finally, ensure you have suitable property development finance in place from the outset

Becoming a property developer requires significant capital. Do your research and make sure you have the finance in place so you can begin to grow your property portfolio with confidence.

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