Unless you intend to improve your own property and sell on, then the first thing you will need to do is to find the correct property suitable for development. To do this you will need to research the housing market as thoroughly as you possibly can. Get this right and you will find there are many property development opportunites.
Researching the Market
The local estate agents can be a good starting point for your research. Try talking to them in order to find out some of the knowledge you'll need. You will need to look at the following factors to inform you before you begin.
Social demographics - are an important factor. Due to an increased divorce rate and an ageing population, the number of single people wanting homes is rising quickly. An awareness of the local population will tell you what type of property should be in demand.
Supply and demand - is another important factor. There has been a consistent shortfall in housing provision in countries like the UK. Recent years have seen lower interest rates and low unemployment which have led to an increased demand which, in turn, has seen an increase in prices. The boom of a few years ago has eased, yet despite predictions of a housing crash, house prices have continued to rise between 5 and 10%.
The local economy - will determine this supply and demand. Make sure that you get a good understanding this. Obtain a local area plan and the figures for the number of new houses built from your local authority planning department. Get this as a percentage of the existing housing stock. Growth in the business sector will also be a good indicator of an up-and-coming area. Use your eyes. You can see if an area is in decline. Maybe it is ripe for a turnaround in fortunes and is potentially an up and coming area for development. Local searches will give you an indication.
Remember - any property investment has a risk element. Be sure to minimise the risks ? know your area. Use the knowledge of local experts. Stick to the localities you know and research them thoroughly. Don?t look too far away from your own area as your local knowledge will decrease.
Target your property or development.
You must ask yourself, is your idea really going to fit the market? Will it suit the locality you have chosen? Or more importantly will it fit the ways in which people want or aspire to live in that locality?
What does your potential customer want?
Young professionals and affluent older couples without children or dependants can like stylish, city centre apartments near the centers that they want to spend their money. Take a look at the current fashions and consider the type of accommodation. Will it maintain its value because of its quality and location? However, families will wants to live in up and coming neighbourhoods where there are good schools, good transport links, safe environments for children and sufficient parking. They will need more space both inside and out. They will also look for lower running costs, however, they will still want good design.
Choosing a Property
The obvious fundamental principal of developing at a property is to buy low and sell high. Look for properties that can be resold for a profit. If you buy well, you limit your risk. Before you buy, explore different ways of achieving that all-important profit.
Quite often a general decorative overhaul can push up the value of a property. You will not need to involve planners or architects nor a big investment.
Converting a property.
A relatively simple, conversion could be to take a house and turn it into flats, however, this still involves complex budgeting and financing. A professional developer would avoid using their own money to fund a major conversion. This is worth remembering if you're considering investing all your own funds. Quite often there is a large gap between the value of a house and what it might fetch once converted to flats - but there are also a lot of costs involved, and often a lot of pitfalls. Occasionally it may be more profitable to convert flats back into a single house. Planning consent will normally be required in both scenarios.
Change of use.
Another opportunity could be the conversion of a building from one of business use into housing although it is generally a more complex proposition. And obvious example would be turning a pub into flats, the big, initial risk is trying to buy the property without first applying for planning consent for 'change of use'. Be warned this could be particularly risky. You should never buy on the assumption that 'change of use' is possible without serious research into the planning issues and a detailed conversation with planning officers. Again, be aware that many planning offices will now make a small charge for consultation over projected projects.
Many sales like this are achieved only when they are 'subject to planning', that is, the deal will only be completed, and the full purchase price paid, when planning permission is granted. Be warned, if a vendor will only sell to you on an 'unconditional' basis, i.e. you pay the full asking price whether or not consent is in place, then unless you are a professional, it is better to this type of deal alone.
With any prospective conversion project, you will need to have a good understanding of building regulations and of the architectural possibilities of your property. You may also need to consult a structural engineer for any significant structural alterations. When converting anything more substantial than a house, you'll probably need a professional team and you'll need to budget for their services.
The team should also include:
- A quantity surveyor who will give you a guide to the costs of your project.
- Architects to design the project, obtain planning consent, and possibly project manage it for you.
Then you will need to market the property.
You can do is yourself by advertising the property on the world wide web on property sites. These sites can save you substantial sums on estate agents fees.