Are you interested in developing a property for a profit? When it comes to property development for beginners, there are general rules that will help to ensure a healthy return on investment. In our guide, we walk you through the process, so you have a clearer idea on how it works.

HOW TO DEVELOP PROPERTY FOR A PROFIT

There are various ways that people can develop properties for a profit. If you have land or a sizable plot, you could build a second property or a commercial premises to sell or rent. You could also buy land to either carry out a ground-up development or get planning permissions and sell to another developer. Some people buy commercial property and then convert this into a residential dwelling or vice versa, applying for change of use on a building.

You could buy a residential property below market value, renovate, and then resell or rent it out. At RJJ Developments, our main approach is to refurb, rent and refinance, which allows us to repeat the process. Working alongside joint venture partners and investors, we source suitable properties to develop that will turn a profit for everyone.

Our team assess an opportunity by weighing up the purchase price and refurbishment costs. If the profit margin isn’t attractive, then we will walk away. It’s important to get your costs right at the start because margins are typically tight.

There are plenty of opportunities available to develop properties that will result in an attractive return on investment. The key is to know what you are looking for and where, along with having the right skills to hand to make improvements. There are specific refurbishments that will enable refinancing, along with increasing the property value.

PROPERTY REFURBISHMENTS FOR EASIER REFINANCING

Your aim is to increase the property value and prove to lenders that the new value justifies the loan amount in terms of refinancing. As a guide, focus on the areas below in terms of refurbishments:

• Keep an eye on the latest property trends to see what’s selling and why. Think curb appeal. Widen the building’s frontage to increase parking areas.
• If space is tight within a property, look for an affordable way to open up the space or convert existing areas into extra rooms. Consider combining rooms to create an open plan living area or converting a loft space into an additional bedroom.
• Kitchens and bathrooms can add value to a property, but don’t waste money on expensive fittings. Depending on your strategy and target market, aim for a good overall decorative standard without busting your budget.

To conclude, to be successful in property development as a beginner, you are going to have to upskill or find a reliable team. You need people who can undertake works as cost-effectively as possible. But most of all, you need to be really clear on your goals. When inexperienced people try to develop properties without the right training or experience, it’s all too easy to go over budget. And when the numbers don’t add up, neither will your profits.

Would you prefer to invest in property and let us do all the hard work for you? Download our Investor Pack.

If you have any questions about this article or you would like a chat about property investing, please get in touch.

Thank you for reading our latest blog, Our Guide: Property Development for Beginners.

RJJ Development