As a property investor, Glenn Armstrong has a lot of experience in buying properties for development purposes. One thing he has always emphasized, particularly for new developers, is the importance of choosing the right property for development.
Property buying for development is seen by many as a lucrative route, particularly by those looking to leave their 9 to 5 jobs.
Glenn highlights in his Glenn Armstrong Property Course that despite the financial crisis of 2012, many people are still able to become successful property developers.
There are three key things every property developer must know:
- How to choose the right property
- How to develop the property
- How to finance the property
Choosing the right property for development
As obvious as it may sound, you need to set a geographical boundary in your search. As attractive as a location hundreds of miles away may seem, you need to choose one which you can realistically get to with relative ease. A good rule of thumb is to choose locations that are no more than an hour away.
Doing this is practical and allows you to be focussed, rather than spreading yourself thin. It also ensures that you have a good understanding of the area chosen.
Simple rules to consider when choosing a property’s location is to find one that is close to schools, transport hubs, hospitals or supermarkets.
Developing the Property
An all-too-easy mistake to make when developing a property is making your own personal dream home. What you like and find desirable is not going to be to everybody’s tastes so remember to stay focussed on your chosen purchasing demographic. Try to keep the décor neutral.
One of the first major decisions to make when developing a property is whether it will be a rental market or the purchase market.
For the rental market you can convert the property in to a House in Multiple Occupation (HMO). This often is the most lucrative option due to rental income being generated from multiple individuals.
Financing a Property Development Project
There are three primary methods of financing that successful property developers use:
- Buy to sell mortgages – These are hard to get, usually requiring a large deposit, a strong credit history and coming with stringent conditions.
- Bridging loans – Bridging Loans are short term loans which can be used to generate funds quickly and with a smaller deposit. You can also use the property that you are developing as collateral for the loan.
- Joint venture investors –Often the best choice for new or less experienced property developers, these allow you to get investment and mentoring. Glenn Armstrong Property can arrange joint venture investments giving you access to mentoring from highly experienced developers and financing to a property franchise business under a profit share arrangement.
