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Five steps to finding the best developer property

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A row of 1930 style housesBuying developer property is different to buying personal property. You don’t have to live there so it’s not essential that you love the place; what’s important is that you can turn it into a sellable property that will make a good profit in as short a space of time as possible. There are straightforward ways to avoid common mistakes made by first time property developers:

1. Know the market The current low interest rates are good news for property developers, but with mortgage providers across the board tightening their lending criteria, having decent capital is essential. There is still opportunity for successful property development, but make sure that your profit margins are generous as lucking out is virtually impossible in an economic downturn.

2. The three Ls It’s not all what you know, it’s knowing where to look too. Picking a good location is still a make or break factor. Up and coming areas on the fringe of a well developed area with higher end property prices that’s near to good schools, amenities and transport links, have the potential to increase in value over time as the area becomes more popular.

3. Where to buy Auctions are renowned for being the best place to get a property bargain. This is true, though the process of a securing a property this way requires a bit of bidding knowledge. Always set yourself an upper limit and don’t get carried away, though this is easy to do in the (surprisingly) emotive atmosphere of an auction room.

4. Take your time It’s better to wait for the right property than to rush in and end up buying a property that doesn’t turn a good profit. Enthusiasm is great, but too much can lead to hasty decisions. The right property will be found and with experience it only gets quicker.

5. Haggle Don’t feel awkward about haggling, it’s expected. Most sellers stick a bit on the asking price to give themselves room for reducing it, so make sure they do! Any money saved on the initial outlay can be reinvested back into the property or into your next development.

Value is the key to great developer property; property that’s great value when you buy it and that you can add value to. Then, sell it at a higher value than you bought it for. While property development can feel like a labour of love at first, keep a business head on to ensure you make sound, considered decisions.