Property Development Property Development Costs

Date Published:

03/06/2009

You’ve found the ideal property development and can’t wait to rip out the fireplace and knock down walls. But the key to making a profit from your project is to get the cashflow right from the start.

By Sarah Jagger

Estimating Your Profit

Draw Up A Budget
Your first step is to draw up a budget, and stick to it. This is vital if your property development is to be successful. To be able to budget well, you need to be aware of how much everything will cost from the beginning of the project, from buying the property to furnishing it. So you need to get quotations for professionals’ fees, mortgage fees, building work, fixtures and fittings, decoration, and so on, well in advance.

Determine The Resale Value

You also need to determine the property’s resale value to work out potential profit. The best way to do this is to see what similar properties have sold for in your area. You can check this out on the Land Registry’s website.

Also ask three local estate agents for separate valuations and ask them to determine whether the local market is right for any property alterations you have in mind. After all, you don’t want to waste money on making a two bedroom house into a four bed, if the area primarily attracts single buyers.

Contingency Planning

Once you have an idea of the costs involved you need to set aside a contingency fund. This is to cover unforeseen problems such as delays in getting building regulations approval or extra expenses such as repairing a roof. You should aim to set aside 10 to 15% of your total budget for this purpose. The last thing you’ll want to be doing when taking on a major property development project is scrabbling around for money.

For More On Property Developing

Phil & Kirstie On Finding An Area On The Up
House Price Crash: How To Bag A Bargain
Property Types To Beat The Crash

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