Steps to Successfully Investing in the Lucrative UK Property Development Market
In spite of occasional clouds of political and economic uncertainties, the UK real estate market has remained resilient and continues to promises good return on investment.
And as the government introduces policies that encourage better access to funding, the country’s property market is forecasted to grow by 25% in the next five years.
Follow these simple steps if you’d like to take good advantage of the unfolding property development investment opportunities in the UK.
Draw a good property development business plan
Whether you’re planning to become a full time investor or engage in the industry on a part time basis while you focus on other business concerns, you’ll never go wrong with a strategic business plan. Set specific goals, funding options, strategies on recouping investment and other step-by-step essentials in property development business.
What are your property development financing options?
This is perhaps the most important consideration in property development investment. True, it requires a lot of money; but the reward of a successful investment makes it worth the efforts.
There’s a range of funding options available to property development options, including commercial or buy to let mortgages, auction financing, and bridging or development financing.
However, about 80% new developers who seek financing from traditional banking institutions encounter difficulties getting the funding they need and at the time they need it.
“Privately owned and independent boutique financiers focused on the UK real estate market offer more attractive and flexible funding options, acting as financial intermediaries in development and investment funding.” – Bridging Loans.co.uk – Development Finance Experts
Decide on exit strategy
Do you want to invest in a buy-to-let or a buy to sell property? What are your exit options?
Note that buy-to-let offers you a long term opportunities to expand your portfolio, as well as a cushion to complement other incomes. A buy to sell provides you a quick option to raise capital, but it is much more risky as it is heavily dependent on market conditions.
Consider the rental yield or ROI
The total rental income is essential if you’re planning on investing in a buy-to-let property. And if your interest is an instant yield with a buy to sell, be prepared to face the volatility of the market and hope it favours you.
In whatever case, 10% is considered a good yield; but always aim for a 30% return on your property development investments.
Location is key
This point is forever emphasized in property development guidelines and advice, but it is hardly properly understood. Location can be about the most vital factor in determining the value of your investment and therefore your rental yield or return on investment.
In considering where is a good location for your property development investment, you need to be foresighted to buy early in an area that will rise in value over time. A common mistake of investors is to buy in an area already considered great.
Timing is key too
Don’t allow yourself to be railroaded by estate agents. Spend good time reviewing the market and the area. Research; do your own background checks. Once you discover a suitable property in the right place, make your investment quickly.
Customize your development to suit your buyers’ or renters’ exact needs
Do you intend the property for families or campus students? What income range do they belong? What residential properties are essential and attractive to these target market? Providing the right answers to these questions and promptly putting them into action will potentially raise the property value.