Property development is, on the face of it, a simple procedure. You buy an asset (that’s the property); you improve it; and then you sell it for a profit. But while this might seem incredibly simple, there are a number of pitfalls into which a new developer might fall. Let’s run through a few of the things you’ll need to watch out for as you start renovating your first house for profit.
Look for a Bad House on a Good Street
To maximise the difference between the price you buy the house for and the price you sell it for, you’ll need to look for unfulfilled potential. If the area is bad, then there’s a fairly solid cap on the amount you’ll be able to sell the house for. If the area is good, then this cap becomes a great deal more flexible.
Focus on the Essentials
When you’re setting out your budget, you might be tempted to renovate the most obvious features that will wow potential buyers when they walk around. But when the property comes to be valued, these things will not matter one bit if you haven’t addressed the fundamentals. If there’s damp, get it sorted. If the house needs to be rewired, then get it done before you do any redecorating. Most important is your structural survey, which should be conducted in advance of any work.
If fundamental changes need to be made, and you’ve already installed an entirely new kitchen, then you may actually end up losing more money than you generate.
Do things in the right order
As well as thinking about what you need to do, it’s worth also thinking about the order in which you’ll do it. Generally, you’ll want to lay carpets and bring furniture in last of all. There’s nothing worse than fitting a kitchen or bedroom to then have to take it out to rewire or replum.
But fix every defect, too
Small blemishes aren’t hard to address, but they may provide would-be buyers with reason to hesitate. After all, if there’s chipped paint in the hallway, then what other nasty surprises might be lurking under the floorboards?
Get this addressed by going through the house and identifying every superficial problem. You don’t need to get a skilled professional in to fix these. Dripping taps, loose tiles, squeaky doors – they can all be DIYed.
Keep Your Eye on the Ball
One of the things that draws people to property development, as a profession, is that it offers a chance to be creative and have fun. In fact, if you’re enjoying the time you’re spending on a project, there’s a danger that you’ll start to mistake your own tastes and desires for that of the market you’re selling to. Do your research, maintain your discipline, and develop the property that will sell for the highest price, not the property you’d ideally like to live in.