As a property investment mentor, Glenn Armstrong has over a decade of experience in buying properties for investment purposes. Glenn’s first advice for all of his property development students on his training website (http://thepropertycourse.com) is to make sure to choose the best property.
Glenn has always been keen to highlight that despite 2012’s financial crisis, property development can still be an extremely lucrative income source for entrepreneurs if they select a great property.
As a property developer, here are three key items to be aware of if you want to become successful:
1) How to select the best property
2) How to develop the property
3) How to finance the development
How to select the best property
As obvious as it sounds, you should buy a property in an area that you know. Buying in an area hundreds of miles from home may appear attractive, but can you get to and from the property easily?
Buying a property that has good transport links and in close proximity to schools, supermarkets and hospitals is a great idea. These properties are more attractive to both potential buyers and rented occupants.
How to develop the property
Firstly, you should remove your own emotional attachment to the property. Rather than developing the property to suit your own tastes, you should use neutral décor that appeals to the widest number of potential occupants.
If you’re developing for rental purposes, you should consider converting the property to a House in Multiple Occupation (HMO). HMOs are very popular in university towns, where house shares are in the norm. In addition, HMOs can be extremely lucrative with the rental income being generated by several people.
How to finance the development
As a developer, you have a choice of property development loan options:
1) Buy to sell mortgages – If you have a large deposit and excellent credit history, then a buy to sell mortgage is a possibility. These mortgages have long repayment terms and are a more traditional finance method for developers.
2) Bridging loans – If you need the money quickly, then a bridging loan is a good choice for you. Bridging Loans are short term loans which are available even if your deposit is small. You can even use your current development property as collateral for a bridging loan.
3) Joint venture investors – Rather than a loan, JV investment involves obtaining funding from partner; usually willing to do a profit share agreement. Experienced property developers are often potential JVs and can provide help and advice as well as money.