Property Investment Developers

publication date: Aug 2, 2011
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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Property Investment Developers


How to Invest in Property


With high inflation eating into people's investments and spare cash, many people are considering investing in property to do up and sell on. Kate Faulkner from the independent property advice site Designs on Property explains if and how to make money from property in today's tricky market!

To make money from property while the market is falling can be difficult. The secret of property investment success during this time is really understanding the market in your area, picking a cracking property to develop and then securing the property for a bargain price. This is often easier said than done though. Spending a couple of weekends searching for a property bargain won't work in today's market. You'll end up over paying for something that will cost more than you thought to develop and then you could end up making a huge loss and losing your dreams of being the next Sarah Beeny!

If you do want to make money from property development, you have to find a way of adding 20% or more value to the property. On top of this, you need to build in a cushion of 10% for any future price falls that might happen as economic conditions toughen throughout 2011 and 2012.

So if a property is actually worth £100,000, you'll have to be able to buy it for at most £90,000 and be able to sell it on for £120,000 to make the property development work financially. To do this you are likely to have to find around 150 properties for sale and then work out the numbers in detail to find five to ten decent deals and eventually secure one of these at a bargain price.

Doing up a property by adding a kitchen and bathroom and redecoration might of worked pre-credit crunch as an investment, but in today's market a property in good condition just sells rather than sits on estate agents ‘for sale' books. So doing up a property like this would be risky and isn't really wise.

What you should do is look to purchase land and build a property on it, which typically adds around 30% capital growth to a property once it can be purchased with a standard rather than specialist self build mortgage. Alternatively you'll need to find a property for a bargain price in need of a huge amount of TLC. For example, properties with subsidence or of non standard construction requiring cash to purchase them, if they can be developed into properties which will be accepted by mortgage lenders, you can increase the price.

Alternatively you need to find a property which you can add value to by re-doing the electrics, putting in central heating, upgrading the windows, fixing a leaky roof and potentially being able to add a bedroom or turn a tiny kitchen into a fantastic kitchen diner!

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