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How to Start a Property Development Business

Have you been dreaming of owning real estate and becoming a self-made millionaire one day? If so, you are not alone and over the years many entrepreneurs have done just that! However, it isn’t always as easy as you may think, but you can become a property developer by following a few simple steps.

Create a Business Plan

Before you can do anything whatsoever, you need to create a business plan. This is your roadmap that you will follow and a very important document when it comes to getting a business license and the financing you will need to get your business up and running. You cannot be a property developer in the legal sense unless you are licensed to do business and you can’t get that license without a plan, so start here.

Understand the Two Basic Models

As a property developer you should begin simple. There are two basic models you can follow which are:

  • Buy to Lease
  • Buy and Sell

It doesn’t matter whether you are considering commercial or residential property. What matters is that you understand the difference between the two models and start out by focusing on one or the other. As a startup you want to keep everything as simple as possible so as not to get overwhelmed in logistics and red tape. Which of those two models is best suited to the real estate market today and which would give you the highest ROI.

Location and Timing

In real estate there are two guiding principles. The first is location, location, location. Some locations are more attractive financially than others and properties will do nothing but rise in value as time goes on. Other locations are seeing drops in prices and if you buy today you may lose money selling tomorrow. Location is everything.

Timing, on the other hand, involves watching market conditions. If property is priced low, you should think about buying and holding until values begin rising again. An example of what to look for would be market conditions like we are seeing now in the days immediately following Brexit. With a downward spiralling pound and real estate that is devaluing as a result, it is a buyer’s market. This might be a good time to buy! Hold until you feel you will get a decent ROI as real estate value begins to rise again and your property development business should see a definite profit. Remember, location and timing are key.

Funding Your Property Development Business

Funding may be your biggest worry when first starting out. Some prime lenders may not be willing to take a chance on a new business so you might want to seek secondary lenders who are more willing to take that extra risk. You need more information on what the lending rates would be, what would qualify you for a loan and then consider which type of lender or lenders to approach.

Getting into real estate is an exciting venture. Nothing has more value than property because there is only so much to go around. There is a finite supply. Consequently, if you are looking for an investment that will yield the highest and safest returns, that would be real estate. You can start a lucrative property development business by following these steps but remember, patience is a virtue. That land isn’t going anywhere so buy it wisely, sell or rent it wisely and you’ll reap the benefits! Really, it’s just that simple.