The world of real estate is an enticing one. There’s something satisfying about the idea of buying a house, putting in the hard labor necessary to doll up the interior design, and then reaping the rewards at the end of it by selling the property on with an increased value. And that’s true; it is very rewarding to know that somebody admires your handiwork and wants to turn your property into their home, regardless of how much of a personal hand you have in the development.
Of course, there’s more to becoming a successful property developer than a love of interior design and entrepreneurial ambition. Much as is the case when starting any business, you need to know the market and the industry in which you’re getting involved. There are many things that can go wrong with a transaction as seemingly straightforward as buying and selling (or leasing) a property. Here are some pieces of advice to help you get your foot in the door of your first property but not make any irrational decisions in the process.
Do your research.
Before you plunge into the world of real estate, it’s vital that you understand what you’re getting yourself into. In many regards, this is a very good industry in which to build a business. You don’t have any worries about whether the commodities you’re selling will lose consumer interest because people are always going to need houses. However, given the nature of the industry, there’s a lot of competition out there and there are also many things that can go wrong when it comes to selling a house fast. That’s why it’s so important for you to do your research. This doesn’t just involve researching potential properties to buy but also researching all the logistical aspects of being a property developer.
You might want to read up on things such as stamp duty. There are more costs involved with buying a property than the upfront price you see. You’ll also need to think about whether you’re planning to sell or lease; if you’re leasing out properties then you’ll be dealing with many recurring costs such as mortgage payments and any bills or council taxes that you don’t leave to the tenants to sort out. It may even help to look into professional help to give you advice before you get stuck into this industry; take advice from people who’ve already made costly mistakes in the world of real estate so that you can avoid those errors and fast-track straight to becoming a successful property developer.
Build or buy?
Not only should you be thinking about whether you want to sell or lease out the properties you buy but you should also be thinking about whether you even want to buy properties at all. You could opt for the route of building brand new properties; if executed properly, new builds can provide a very enticing ROI. Of course, if you jump into such a big undertaking before you’re ready then this could end your business venture before it really begins. Remember, when you opt for the DIY approach, you’re responsible for the very quality of the house itself. That’s why it’s so important that you have a professional team backing you if you go down this route.
You need contractors that you can trust. Hiring a team of ‘cowboy builders’ is not only putting your property development empire at risk of a bad reputation but it’s also putting any potential residents in your properties at risk in terms of their personal safety. It’s so important that you do your research into the market and get quotes many different contractors so that you can judge their character. Trustworthy builders aren’t always the ones offering the lowest price, so don’t be fooled by that trick. Look at the reviews that different construction firms have; you’ll mainly rely on the feedback from their previous clients.
Choose the right location.
You’re nodding your head. You already know how important location is when it comes to buying property. Everybody with a semblance of knowledge about the real estate game most likely already knows this. However, what you may not realize is which locations are better than others. “Easy,” you say. “The nicest area of a town or city.” Wrong. If you buy an expensive property in a nice area then it’s most likely already a high-quality build with little room for improvement. A property developer’s goal is always to increase the value of the property they’re buying. There’s where you make your profit.
Your goal should be to buy a property that’s in a moderately decent area. You don’t have to buy a property in a dodgy or low-value neighborhood, but try to find an area which has the potential to become “the nice part of town” in the future. You want to be able to turn over your property for a good profit; we’ll keep hammering that point home because it’s very important for you to understand that.
Choose the right property.
You’ve done all your research and you’re ready to get stuck in. When it comes to buying your first property (in fact, this is good advice for all the properties you’ll hopefully buy afterwards), you need to be patient. Don’t leap at the first good deal you see. Focus on choosing the right seller. You want somebody who’s very eager to sell their property quickly because they’re most likely to give you a good price. You should haggle, of course; try to drive down the price as much as possible by suggesting that you’re only partly interested in buying.
Remember, when it comes to making a profit in real estate, you need to focus on saving costs to really maximize the amount of money you make. That’s why it’s so important to pay as low a price as possible when buying a property so that you’ll be making a hefty profit once you lift the property’s value and sell it. You need to think about the kind of person who’ll buy the property too. If it’s a student then they won’t expect high quality. A family, however, might be fussier.
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