Can You Still Make Money With Property Development

Entertaining ourselves at the expense of hapless amateur property developers is where we are directing our TV remote gadgets to these days, particularly because they go over budget, are under staffed, and clueless. Having said that, by some miracle never fully explained, end up making money after all.

Inconsequential I’m sure. For the sake of TV, our “investors” will always be in the money. Well, it just makes for better TV don’t you think?. Suggesting some omissions somewhere methinks. A prime example that springs to mind is did they actually get the house for free. Or did they have to buy it like the rest of us, are the repayments actually factored in, and how much capital gains tax they have to pay, or how much they paid for their tax liens. I’m also thinking that most people on the show still have a day job. Did they get paid leave, or is that a cost to factor in too – loss of earning?

Still, it’s all good clean fun.

With our feet back on planet earth, how easy or difficult is it to make money by renovating fixer uppers, whether obtaining it via tax lien certificates?

Once again, it is all a matter of very careful number-crunching. You first have to discover, by diligent research, how much a property in good condition will fetch in a particular area, compared with a similar property in bad or derelict condition. A good project is one that has enough difference between purchase price and selling price after renovation.

So far so good. So what’s it going to cost to fix up? These costs needs to be closely monitored if you’re renovating tax lien properties. Most people fail to grasp how expensive it can be to refurbish and the length of time it can take. You cannot always get builders just when you want them, and often, obtaining approval for any extension work can be very long winded. Councils can be a law unto themselves at times. And then there’s the costs associated with applying for planning permission. Not inconsiderable either.

So next we come to the means you’ll use to purchase the property. The vast majority of developers use mortgages. And unless I’m mistaken, mortgages still cost money. Once you become the legal owner of a property you become liable for taxes, service charges, ground rent, utilities and the like. Seems like everybody is after a slice of your pie. You’re liable for these costs until the day you sell the place.

Apart from this, you have the always unknown factor of house price fluctuations. There may be a sudden collapse in the market which will adversely affect the sale price of your development, however lovingly you have restored it.

Before ever developing a property, you have to be ready for the eventuality that it doesn’t sell for several months. Have you got enough funds to tide you over if you are unable to sell the property? We all have had places sit empty and idle for too long for comfort. Even the best agents in the world can’t magic a buyer out of nowhere. Sometimes you just have to ride it out. Sometimes you just have to hang in there until the right buyer happens along.

First Steps First

The first thing you have to do is target an area just starting to come up. One way to pick the next winner is looking for well kept houses, manicured gardens and new cars on the drive. A high percentage of new or nearly new cars outside houses is usually a dead giveaway.

One way of discovering a hotspot is to look at areas just next to those which have already come up. For instance, when Holland Park, got too expensive for most people, buyers started looking in surrounding zip codes, all backing onto Holland Park.

Can You Still Make Money With Property Development

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