Don’t go it alone…
Property development is easy, simply purchase a run down property below market value, renovate, sell on for a profit or rent the property out, hey presto you are now a property developer…simple…or is it?
Well we can assure you that whilst the concept is relatively simple, execution is far more difficult, at Fabrik we have first hand experience and we can honestly say that we lost a lot of money on our early developments. It has taken a lot of time, effort and expense to get the formula right, now we can confidently say we can take on a project, deliver it on time and within budget 96% of the time. Yes you heard us right 96% percent of the time, from our experience there can always be that little surprise during a property development that even the most savvy of property developers can’t account for.
This is why we don’t like to see our clients ‘go it alone’ when it comes to property development, talk to our team and learn from our mistakes and not yours!
10 Worst mistakes made by amateur property developers
Buying in the wrong area
This is one of the most basic errors amateur developers make, most amateur developers think it’s easier to find an opportunity than it actually is, remember you are in competition with professionals like Fabrik who spend 100 per cent of their time hunting for profitable projects.
Understanding finance, don’t pay too much
Amateur developers are often tempted to borrow more than they can afford, driven by how much money they think they are going to make, warns Matt Harper-Penman co-founder of Fabrik. Always shop around for the best possible deal and be realistic about how much the whole renovation project is going to cost you and the time it is going to take.
Be careful not to get fleeced but the builder
Renovation of the property is only as good as your builder – so scope out their work first and get references from past clients. Before contracting them to do the work, make sure they’ve signed a price contract – without this it is easy to get ripped off if the build continues for longer than expected.
Don’t cut corners when it comes to quality
Yes, you can always buy cheaper, wether it is handmade tiles, oak floors or composite work surfaces, avoid this trap. As tempting it is to buy the cheapest of everything, potential buyers will notice immediately if you cut corners. Even if you have a limited budget, choose appliances, fixtures and fittings because you know they will last, not because they are cheap. Remember don’t scrimp on the exterior of the property as the majority of buyers will decide if they want the property before they’ve stepped through the front door.
Don’t over spec your renovation
Over specification can be equally as important as cutting corners. From our experience, buyers often get put off by lavish marble bathrooms with crystal taps and silk carpets. Keep your feet on the ground and go for a clean, fresh finish rather than anything too fancy.
Avoid getting too personal
Remember it is an investment and not your home, so avoid inflicting your personal taste on the renovation. Neutral does not mean boring, aim to keep rooms as bright and light as possible, giving buyers a blank canvas on which to project their own ideas.
Be clever with space
Most amateur developers think, more bedrooms doesn’t necessarily mean higher profits. More often buyers want quality space rather than cramped living conditions – prioritise the key living areas rather than trying to squeeze in an irrelevant box room. First-time developers should focus on the layout of their project, ensuring that the rooms flow together and there is a balance of entertaining space, living space and bedrooms. If the space planning is poor even having a high-quality finish will not help you sell.
So often amateur developers look to make a quick profit and commence work without proper plans – or planning permission. The more attention that is paid at the planning stage the more efficient the project will run. Also ensure that you have all the necessary paperwork before works commence, avoid this and there can be complications when it comes to sell.
Be realistic with profit don’t get greedy
Your renovation is complete and the property looks a hundred times better, this doesn’t mean the property is worth a hundred times more. Being greedy can often cloud the opportunity of a good sale. An overpriced property will go stale on the market and savvy buyers will be aware of this and often leads to lower offers than you originally intended. Get the property valued by 3 different estate agents, the one with the price in the middle is often right!
Get the timing right for the best time to sell
Finances might be tight, or you are just excited to get your property on the market, get the timing right to get the best returns, in winter everyone is busy with Christmas and in summer they’re on holiday, spring and autumn consistently get the best returns.