Here are five top tips worth considering if you’re an aspiring or ambitious property entrepreneur.
1. Take Your Time to Find the Right Area – There’s that well-worn saying about the three most important factors when it comes to choosing your home, location, location, location.
Do your research to find out exactly what the market is like in your chosen area. What are buyers and renters in that area looking for? How much are they willing to spend? Talking to an estate or letting agent is a good place to start.
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2. Keep Your Eyes Peeled for Opportunities…but be careful – When looking for a property, you’ll want to find somewhere you can add value.
Look for things like unused loft spaces that could be bedrooms, large gardens that can be sold off, empty outbuildings, or whether a building could be split into flats.
If the condition is poor, see if there’s a similar house for sale nearby that’s in better condition. Then, tour that house to better visualise what is possible in the house you are considering.
If you suspect structural issues, however, be very careful – and always get a survey. If the property does have some complex problems, that doesn’t mean you can’t proceed. It just means you need to make sure it’s factored into the price you’re paying, and your renovation budget.
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3. Keep Your Project Within Reach – It’s always a good idea to buy in an area that’s close to you. Ideally, you’ll want it to be within an hour’s drive from where you live.
Even if you’re employing a site manager and contractors to carry out the work, being able to regularly visit will help you ensure that everything is going to plan and is meeting your expectations.
If you’re familiar with an area because it’s local that’s a bonus as you’ll probably have a better understanding of its amenities and most desirable streets. With that local knowledge, you’ll be more confident in making a quick offer once the ideal property pops up on the market.
4. Be Ambitious, But Acknowledge Your Limits – You need to decide what kind of investment you’re comfortable with – buy-to-let or buy-to-sell.
While buy-to-let is a great way to provide a long-term income stream, it’s not an easy way to make a quick profit – you’ll need to be dedicated and recognise that the needs of your tenants are always paramount.
To be successful with buy-to-sell, you’ll generally need to buy a property that needs work, whether that’s upgrading the interior or converting the attic into an extra bedroom.
You then make the necessary renovations and sell for a profit, making sure to factor in the costs of the work. The more work required, the larger the risk, and the bigger the potential profit – but it’s a good idea not to take on too much if this will be your first project.
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5. Find the Right Lender for You – It’s vital to have the right lender in your corner. They’ll allow you to seize an opportunity quickly and complete any necessary works.
There are several funding options open to property developers, from mortgages to bridging loans. Which one you choose will depend on your circumstances and the type of property you’re buying.
Often, if a property is run down and has little value, you might find it harder to get a mortgage that would cover the renovation costs.
A bridging loan or development finance, only available via specialist lenders like Together could quickly help you in this situation.
* Kirsty Rogers is Business Development Director at specialist lender Together *
