If daytime TV is to be believed, anyone can make a career in property development and can somehow managed to turn in a respectable profit on a property in spite of costs and building time both being substantially higher than expected. In the real world, most people realise that if it was that easy, everyone would be doing it. If, however, you do want to develop a property yourself, either as a career or as a one-off project, here are the top mistakes to avoid.
Buying unsuitable property or land
If you fall in love with a place to live and you want to develop it yourself from start to finish to be your dream home, then what you buy can be guided entirely by your own preferences. If, however, you want to make a profit out of the development then you need to ensure that any property or land you buy has decent commercial prospects. Often this means making yourself thoroughly familiar with the local area as a whole and understanding what the future is likely to bring.
In principle a lender should pick up on whether or not you are over-stretching your finances, but at the end of the day, it is your responsibility to manage your money. Starting out on a stretched budget before you’ve even started your project is, quite bluntly, a way to set yourself up for heartache and wallet ache.
Underestimating the money and/or time required
Learning to price developments accurately is vital for anyone who wants to make a career as a property developer and is still hugely important to anyone taking on a property development project for their own interest. Property development companies check their figures very carefully before committing to any commercial project, they also have extensive experience to guide their judgement. Amateurs are probably best advised to check their figures as best as they can and allow themselves a substantial financial cash cushion in case of error. Similar comments apply to estimating the amount of time required for a project. Getting this wrong can seriously damage your budget.
Failing to understand the importance of a professional and independent architect.
As a rule of thumb, if a project is substantial enough to need planning permission, it probably needs an architect’s involvement and even if it isn’t an architect could still be very useful. Employing an architect directly means that their only responsibility is to you, their client. Using a builder’s architectural services can set up a conflict of interest since the decisions which make the highest level of profit for the builder may actually be the wrong ones for your property and unless you really know your way around property development well enough to pick up on this, you may wind up spending a lot of money for little to no return.
Getting the wrong builder
Sadly, cowboy builders are a fact of life rather than just a TV fable. It’s vital to avoid them (an architect can also come in useful here as they often know their way around local construction companies).
Trying to pack too much into too little
This is another mistake, which may be down to the influence of daytime television. In a densely-populated country such as the UK, space is at a premium and therefore, on a like for like basis, the more people who can share a space, the more economical that space becomes. Hence people who already own homes they like may well try to squeeze a little more usability out of the space they have so they can avoid having to move (or at least delay the move). The key point to remember, however, is that spaces need to be liveable. Multifunction furniture and modern technology may have made it possible to live, comfortably, in smaller spaces, but there are still limits and this needs to be recognised.
Certainly it’s worth talking to a professional development company, it could save you a lot of the heartache but still give you similar or even better returns.