How to become a property developer... that's what today's video is all about and I'm also sharing 10 property developing tips because I feel property development is a FANTASTIC way to build equity.
I am delighted to say Today's video is in association with the Refurbishment Masterclass run by the highly regarded Martin and Sarah Rapley - an expert at project management with tons of experience developing land, property (real estate) and other development.
I've managed to persuade them to let me give away five of their amazing project management PDF fact sheets. They're on how to write project specifications, putting together budgets, how to appoint builders, working with builders, and managing your timeline of works. These are incredible resources and click the link below to download them...
Here are the tips...
1. Always work backwards from the gross development value, or GDV, when calculating a purchase price. It's the very best way to work out what you should be paying for a property or a building plot. Be realistic about this gross development value. In fact, can I suggest perhaps being a little bit pessimistic when calculating this figure.
2. Next, just because a property needs refurbishing, that doesn't automatically make it a good deal. If you spot a property that appears to be, say, 20,000 pounds below market value, if you've then got to spend, say, 30,000 pounds doing it up, that's not a deal. Unless you can add some real tangible value in some other way, for example, say, building in the back garden, I would suggest you should be looking for another project.
3. Just because a plot has planning, that doesn't guarantee you a profit or that the property could even be developed at all, for that matter. Obviously, you need to do your research careful and dare I say if the agent is offering up some fairly persuasive numbers, for example the gross development value, keep in mind the agent makes a commission if you buy. Personally, I would suggest putting more faith in your own numbers, rather than theirs.
4. Always have a schedule of works. If you don't know what you want, how does the builder, and just as importantly how can you possibly have a realistic budget?
5. You can't build from planning drawings. It's therefore impossible for builders to accurately price from them. Your architect needs to produce building reg drawings before you go and get any prices.
6. Don't be afraid to outsource to experts. Honestly, they will save you thousands in the long term.
7. You don't have to appoint the cheapest builder, work with the best builder. On any one project, you can only achieve two of the following three items. You can get high quality, fast turnaround, or low cost. Our advice is to aim for high quality and fast turnaround, if you possibly can.
8. Delaying the project whilst trying to beat down the price can cost you more in the longer term than what you're trying to save. Delays tend to swallow up your profits as the financing costs on any given project are genuinely quite high.
9. Always agree terms with your builder before the work starts and write them down for both parties to keep a record of. On larger projects, don't be afraid to use a formal contract.
10. Lastly, I've got to ask you this question. Is project managing the works really the best use of your time and skills or might your time be better spent going out looking for that next deal?
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Here's to your success... Tony Law | Your First Four Houses