Becoming a property developer isn't plain sailing and profits - challenges are numerous and it does help to have a background in estate agency, interiors, surveying or finance. Finding the right property or piece of land, in the right place and at the right price is paramount and competition between developers is fierce.
Know your local market
Once you've found your property or land to develop, the next step is to assess the market. Establish a ceiling value in your operating area and research what type of property is always in demand. It's no use buying a luxury penthouse if the market is driven by students or first-time buyers. Use the knowledge of local estate agents to get a feel for what's going to sell.
Know your potential buyer
However, getting the job right involves more than simply deciding on the most appropriate size, style and price for the local market. Put yourself in the shoes of potential buyers and think about what they need from a home. Try not to let your heart rule your head when it comes to making decisions - you're not buying a property to live in yourself.
If you buy a property to develop in an affluent area, make sure there is off-street parking or a garage, as potential buyers will have cars to park. Similarly, if you buy a home in the catchment area of a good school, make sure your property has a garden, as families will want a safe place for their children to play.
Formulate a budget and stick to it
It's also vital to work out your budget and adhere to it. Don't be tempted to add extras to a property that won't be recouped in the sale. Although extending or converting a property can bring vast dividends, it can also end up costing a fortune if things go wrong. For instance, you might get planning permission to add another storey to a property but when the builders start work they may uncover a host of structural issues that have to be remedied before extension work starts.
In the same vein, surprises always crop up, even when carrying out light remedial work, so build in a 'contingency sum' to cover unforeseen hitches. For new properties it's typically around 5%; for conversions it may be up to 10%.
When you buy is crucial
In a stagnant or falling housing market, the danger of losing money through overspending is more acute. Speed is also of the essence - the sooner you can turn around a property the better.
Create a realistic time plan
Dealing with planning authorities and meeting building regulations takes time - sometimes much longer than anticipated. Planning is tougher if you're building from scratch. It's also important to gather together a team of contractors whom you can trust and rely on. The supply of high-quality contractors has improved considerably with the enlargement of the EU, so be open to anyone who is legal, trustworthy, skilled and committed to getting your project ready on time. If they keep popping off to attend to other jobs, you will fall behind your time plan.
Learn the lingo
Novice developers undertaking building projects also have to get to grips with the array of materials and the technical terms likely to be thrown at them by their suppliers. An invaluable treasure trove of information for many aspects of the building or renovation process, including new legislation, products, processes and materials, is The Building Centre in London. It's a free service offering a comprehensive reference library, publications on specific aspects of building from sound insulation to underfloor heating, a phone-based advice service and educational lectures.