Glenn Armstrong is a property investment expert, with years of experience in buying properties for development. As a new developer, Glenn’s first piece of advice in his property development advice website (http://askglennarmstrong.co.uk/) is to always choose the right property.
Property development is seen by many entrepreneurs as a lucrative route to leave their 9 to 5 jobs.
Despite the financial crisis of 2012, Glenn has highlighted that many people have still been able to become successful property developers.
Here are three key items that every property developer needs to be aware of:
1) Choosing the right property
2) How to develop the property
3) Financing the property development
Choosing the right property
It may sound obvious, but setting a geographic boundary is vitally important. Buying a property hundreds of miles away may seem an attractive proposition, but can you get there regularly with ease? A good rule is to choose a location that is less than an hour away.
This is good for practicality and knowledge. Not only will you probably have a better understanding of your chosen area, you can easily travel to and from the property regularly.
Buying property that is close to amenities such as schools, shops, hospitals and transport hubs is vitally important.
How to develop the property
The first thing you need to do when developing a property is to remove your own emotional attachment to the project. Every person’s tastes differ, so neutral décor is best to appeal to the mass market.
Beyond décor, you need to decide if you’re developing the property to sell or rent. If you’re developing a property to rent, you can always consider converting the property to an HMO (House in Multiple Occupation).
HMOs are particularly popular in areas close to universities where student house shares are common. HMOs can be lucrative due to rental income being generated by several people.
Financing the property development
Developers have a multitude of property development finance options available to them:
1) Buy to sell mortgages – These are difficult to get without a large deposit and extremely strong credit history. If you do get a buy to sell mortgage, you can expect to have strict repayment conditions to adhere to.
2) Bridging loans – These are short term loans which can quickly generate funds even if you only have a small deposit. You can use the property you’re currently developing as collateral for a bridging loan.
3) Joint venture investors – This involves finding investment partners for your project. This can be an excellent choice for new developers, who can benefit from advice as well as financial input from their more experienced partners.