The key to any investment is to buy something as cheaply as possible, develop it and resell it. This sums up the whole process of property development. The ability to see a property how it stands today and how it will look after redevelopment – this is the key. Yes, there will be challenges; there will be issues ahead and no doubt significant investment, but an ability to look above and beyond is priceless.
Back to basics
Many property investors with an eye on the future are able to see a property development stage by stage in their mind. Could greater use be made of land to the side and back of the building? Might it be sensible to introduce an extension? Is there a ceiling in property prices in the area?
Whether we like it or not it is human nature to put our own stamp on a property. So, it is therefore understandable why the vast majority of property investors will come in and make changes when they acquire a property. When we talk about property development it does not necessarily have to be huge changes costing tens of thousands of pounds. A subtle tweak here and there can change the look and feel of a property, removing a wall can expand the living space and relocating the bathroom, as one example, can make a big difference.
Looking for property development inspiration?
If you are looking for inspiration simply look around you, check out the neighbourhood and see if there are any trends. There is no point trying to reinvent the wheel, if something is popular in an area and you are buying a property there, go with the flow. This has the potential to open up a significant market as and when you look to sell the property. If they are looking at a neighbouring property with similar facilities, why would they not check out your property? Perhaps they have been gazumped and are looking elsewhere for a similar styled property?
There will be certain trends in the property development market which are relatively short-term. The key here would be to get in, get out and bank your profit as quickly as possible but it is not always as easy as that. Therefore, it is probably best to go for longer term trends in the neighbourhood as opposed to jumping on a short-term bandwagon. What happens if you get left with a property and the new fashionable trend comes to an end?
Value for money
While it is difficult to put a figure on how much appreciation you should expect from every thousand pounds spent, you should be talking at least double. If you spend £20,000 on a property then you would hope appreciation of around £40,000 as a ballpark figure. There is no hard and fast rule but if you are a property investor, looking to buy and sell assets, you need to get a good return on your investment. If you spent £10,000 to increase the value of your property by £10,000, was there any need to do it in the first place?
Property development is an art, the art of identifying a property which would benefit from a revamp and redevelopment. The ability to see what a property could look like in the future, as opposed to what it looks like now, is a gift. Those who have this gift are some of the best property investors in the world today.