The real estate ladder is always a tempting one to climb on. Real estate development can be even more exciting. Brand new properties can return their investments very soon if handled well, even before completion. On the other hand, poorly-considered real estate development can very well lead to disaster. Poorly built homes by shoddy builders. Mismanaged finances. Bad knowledge of the local housing market. These are some of the mistakes seen again and again from rookie real estate developers. This guide is here to help you avoid some of those pitfalls.
Financing your build
Make sure you have the resources to build before you do so. If you’re selling one property to finance this, you will most likely need Bridging Loans. These loans are taken against your assets with the understanding they will be paid off when your previous property is sold. Whatever loan it is you’re taking, make sure that you don’t take any more than you need. The way you can make sure of this is by following the next step.
Real estate development isn’t something that can be done with a loose budget and wavy projections. Having no budget at all is entirely unthinkable. Take the time to consider every avenue of cost. This includes leaving a certain percentage of the budget for any of the unexpected problems that might pop up during building. This template provides a good guide on how to budget your money. Consult your budget on each step of the way and make the financial steps of the process as painless as possible.
Choose builders you can trust
The sad fact is that there are many contractors out there who are amateur or untrustworthy. Of course, there are plenty that are diligent, honest and up-front. The problem is that getting stuck with the wrong ones can lead your development into disaster and cost you more than time and money. Choose your builders carefully. Look at reviews, research the market and talk to as many of them as you can. Don’t be fooled by low pricing, sometimes it can be used as disguise for untrustworthy practices.
Keep an eye on the local market
It has happened far too often. Someone has had the idea that they can make a lot more money developing an eight-bedroom property instead of a five-bedroom property. The only problem is that there is absolutely no need for an eight-bedroom property in the area they’ve built their home. They’ve spent too much and they’ll be waiting a lot longer for the investment to pay off. Use sites like Zoopla to get an idea of the needs in the area, to begin with. But visit the area, too, and get to know it, so every choice you make is informed.
There are a few more tips to follow, such as using plain décor so as to not put off any prospective buyers or renters who don’t share your personal tastes. It’s also a good idea to find out how you can save money on the mortgage, but this guide is for the major pitfalls of property investment. Keep all these close in mind and you’ll have a much better chance at climbing another run on the real estate ladder.