Property development is a risky business. You could make a fortune or you could lose everything and end up in debt for the rest your life. You have to do your research thoroughly before you buy. Find out how much other properties go for in that area, how much stamp duty, searches and fees will be, are there any restrictive covenants, and the cost of any refurbishment. When you have done your sums work out exactly who you will be trying to sell to, how much you will realistically get and whether the profit margin is worthwhile. Property development is very capital intensive and you have to get your sums right. If it was easy we would all be millionaires.
You make money when you buy a property rather than when you sell it. Thus it is essential to get the right price for a property and every pound you can knock off the asking price is money straight in your pocket. If you pay top dollar for something, however good it may seem, you are not going to be able to make a decent profit because the margins are so slim. Look out for properties that have planning applications in with the local authority. They might accept a good offer subject to planning permission and if it eventually gets planning you get the upside!
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Posted: 19. February 2011 07:00