Tag Archive | Funding

What Really Goes Into A Property Development Business?

If you have an eye for investment, the housing market, and making a property as appealing as possible, you may want to find a career capitalizing on those skills. Property development is more than just building and it’s more than just buying and selling property.

property

It’s the step-by-step process of finding, improving, and selling properties for a profit and it can be a hugely lucrative business in the right market. But what goes into getting such a business off the ground? What are the skills you need, the partners you need, and the processes you have to go through?

The funding

Property development is all about making investments pay off. As expensive as property is, of course, you’re not necessarily going to have all the cash you need to get started on hand.

All throughout your career, in fact, you’re likely going to have to keep finding and tapping sources of funding.to avoid eating the brunt of costs yourself. Property development loans don’t work like new build loans, either.

You don’t get the lump sum of cash all in one go, but rather it tends to be split into different stages, each stage representing a stage of development. For that reason, experience in creating and working to budgets on developments in the past could be crucial.

The strategy

Not all property development business work exactly the same, either. You might have a wildly different profit model from another business in the same market, for instance. In plain terms, your profit model might be based strictly on the purchase, development, and sale of land and property.

Or, depending on what your local market is like, it might be based on buy-to-let or build-to-let properties. You need to figure out your market, which of your options is going to be most profitable, or if perhaps you need to mix both strategies to some degree and come up with the appropriate business plan.

There are templates available to help you craft it, essential as it is. If you don’t have the path to profit laid ahead of you, it is going to be all the harder to find it.

The speciality

Most property developers specialize in some kind of property or some kind of investment opportunity. The most common kind is those who buy, renovate, and sell resident homes to the private market.

But you might focus on acquiring land and building new properties or developing properties for commercial entities instead. Finding a niche is valuable because it gives you a specific market to focus on. Properties have to be developed not by any one rule-book but catered to the specific buyer or tenant.

Learning what their priorities will be can allow you to focus your budget more specifically on what is most important about the property for them, not just a scattershot approach to increasing the value of a property.

The location

There’s one rule in property development that you have to learn above all else: you don’t make your money when you sell a property, you make it when you buy it. For that reason, opportunism is one of the key factors in a successful property development business.

Finding those opportunities for profit is all about location, first and foremost. You need to get to know different areas, look for the signs of neighborhoods that are on the rise, changes in demographics, whether a city or area is more rent-friendly or more profitable for buying and selling, and so on. Pay attention to rent price, to recent sales, and to signs of development in an area such as new services and businesses opening there.

The timing

Opportunity is all about timing, as well. The housing market has its ups-and-downs not just in the grand scheme of things but from year to year. To profit as much as possible, you need to buy when prices are cheap, then develop and hold onto properties until prices are high again.

Finding the ideal time to buy and sell might not always depend on seasonal shifts, either, but on market dynamics. It’s a good idea, once you’re up and running, to sell property before you buy, so you don’t always have to rely on bridging loans that can impose some restrictions on your overall budget.

The connections

As a property developer, your expertise is going to be in finding the best possible opportunities for property development. You are likely not going to be a contractor or renovator yourself, so you need to build connections within those industries to make the actual development side as painless and cost-effective as possible.

This includes builders, utility fitters, painters, renovators, architects, and companies that rent out equipment like diggers and tip trucks. Fostering connections within these industries is crucial. The better your relationship, the longer you’ve worked with them, the more likely you are to benefit from better deals.

Beyond just searching for these services like a consumer would, take the opportunity to network within trade shows that tend to act as a shared space for many of these services.

The marketing

The property market isn’t the only one you need to concern yourself with. You need to focus on building a brand as a property developer to the market of consumers, as well. This includes learning to market the properties you develop and doing so without the assistance of realtors can reduce your overall costs.

But property developers can also extend their services to others, such as landlords or property owners who want to increase the value of their own property. If you offer your development services to others, then you have a strong brand.

This includes having the right digital brand, but it also includes having show homes created in conjunction with interior designers and stylists to give an idea of the final product you offer.

If you don’t have any experience either in renovations, property investment, or construction, then it’s probably a good idea to get some. You need to know the market and what’s involved before you try to make a career profiting from it.

 

Advertisements

Need Funding For Your Startup? Here’s How You Get It.

 

funding.jpgIf you’re looking to start a business or a project, the chances are that you’re going to need funding. Asking people for money and finding the funds you need can seem like a daunting process. But it’s not impossible.

Instead of waiting for that one big investor to pop up, you should diversify how you gather your funds. It can be a lot quicker and you can pay off individual investors a lot quicker.

Have a plan

Before you approach anyone, you need more than a ‘pie in the sky’ idea. A good idea is a useful thing to have, but a plan on how to implement it is better. Know how much you need and how you need to spend it. Show how you intend to get those returns in detail. Make sure your idea has a market and a unique appeal to it. The more prepared you are, the more attractive your proposition will be.

Contribute

If you’re serious about it, then you need to be willing to invest in it yourself. People don’t want to see someone who’s not willing to take a real risk on their own proposal. A little share of your savings isn’t enough. Consider freeing up funds through means like loans for homeowners. Just make sure that you pay yourself back first to mitigate the risk of your contribution before others.

Network long and hard

You’re going to have to get out there and shake hands and talk face-to-face with people. Don’t be duplicitous about your intentions on networking with investors. Be upfront about your intentions, but don’t rush to discuss the nitty gritty details. Let them get to know you. Introduce yourself as a person to them before introducing yourself as an investment opportunity.

Comb the funding databases

There are a lot of other ways to get funds, too. There are whole databases of foundations who you should be writing applications to. A lot of them will only accept non-profit projects. Others, however, will be more willing to help if your idea fits their goals. For example, you might get funding if you’re willing to take on disadvantaged workers or contribute some of your efforts to a cause.

Crowdfunding

If you have a truly innovative idea and a plan for it that can be enough to help you be of intense appeal to a market. If the market wants to see you out there, succeeding and providing what services or products you have, it might be all the support you need. Take a good look at your idea and whether it might be a fit for crowdfunding.

Competitions

It’s not a method of getting funding that a lot of people will immediately think of. Competitions take effort and time to enter and there is a good chance that you won’t win. However, if you do, you don’t only get the funding. You also get the branding and seal of approval of winning that competition. That can serve as an accolade that only helps your business succeed.