Even for smaller property developers, having new projects in the pipeline is important. Property markets don’t stand still and neither should you. Just because you bought in a good area last time, doesn’t mean the same place will work again.
One of the cardinal sins of property development is to hold onto a property in the hope it will increase in value. Property development is all about being active and creating value, not waiting for value to come to you.
With that in mind, it makes sense to have a flowing pipeline of developments on the go. Here’s how...
Always be on the look out
When you’re not renovating properties you should be doing your research. The basics include keeping an eye on websites for that one true bargain to come through. A good way to keep up to date is to sign up for all the estate agent websites and get daily alerts when new properties within your price range come to market.
But you also need to become a genuine expert in the field. This means staying on top of the latest house price indexes, changes to legislation, new developments in your area and more. Once you know this sort of information, it becomes easier to know what makes a property worth buying.
Then, instead of only noticing a few potentially winning properties, you’ll be able to spot more – as those which might not look like a good deal to the layman might hold hidden secrets to the expert eye.
But it’s not just about doing passive research – you’ve got to get out and about and talk to people. Networking is important in any business but especially in the fast-moving world of property development, where bargain buys might not even make it to general public.
Talk with estate agents and let them know exactly what it is you’re looking for and to give you a call if anything comes in. If you can prove to them you’re a serious property developer, they’ll be happy to throw some leads your way as it could mean an easy sale – and commission – for them.
A good place to network are the monthly Property Investors Network events, which are held across the country for property developers and investors.
And it shouldn’t stop there. Speak with builders working on your homes to see if they’ve worked on anything else recently that could prove a bargain. Same goes for removal workers – for various reasons homes are often cleared before they go on the market, so removal teams might have advanced word of new properties for sale.
Finally, go to property auctions. These are not only a great place to find bargain properties, but you can also talk to auctioneers, sellers and other developers about what’s happening in the market. And if you do happen to stumble onto a bargain, you can use a bridging loan to secure the property.
Keep your finances in order
Always have your finances in hand. Know what you’ll need to secure either a bridging loan (if you need to move fast), or a high street mortgage. This means having your paper work up to date, knowing where the best deals are for lending, and having enough savings to put down a deposit.
Remember, we can approve a bridging loan within a matter of days if needs be, so keep our number on speed dial.
Using a bridging loan can help you keep the property pipeline flowing. It means you can move quickly on bargains and stop you waiting around to sell one property before you can buy another.
The trick with property development is to always have a few properties at various stages. It can be tricky juggling the different projects but it’ll mean you’ll always have cash coming in from the sale of one.
Sometimes, though, the overlap between projects isn’t as clean as you’d like. Renovation projects can take longer than hoped, while a drop in the market can mean it takes more time to sell than estimated. In these situations a bridging loan could help by providing funding to buy new properties while you’re waiting for work on others to complete or a sale to finalise.