5. Will You Make Any Money?
5. Will You Make Any Money? (Image 5 of 10)
It's an easy equation. Take the initial cost of the property and add to it the fees incurred in buying it and selling it on - estate agents, solicitors, stamp duty, borrowing costs, survey, land registry, planning and building control costs if you're taking on major renovation - plus the realistic cost of the renovation or decorating work (rather than guessing yourself, try to find a willing builder to view the property with you and give you an honest quote). Then add a 20 per cent contingency for unforeseen expenses. Subtract this total from the potential selling price. That's your profit. In real life, it will probably be lower because what you think you will spend and what you actually end up spending are never quite the same.
Do It Or Leave It?
ALWAYS be realistic about your own skills and buy in any skills you don't have.
NEVER buy a property until you've had a survey done. If the property's going to be a money pit, it's best to get out while you can.
ALWAYS make sure you've got a healthy contingency fund. However generous your budget is, extra costs have a way of creeping in.
NEVER stretch yourself to the limit financially. Developing can be stressful at times - don't make it stressful right from the start.
ALWAYS make sure the fabric of the building is sound before you start making expensive alterations.
NEVER forget that your aim is to make money - don't waste cash on things your target market won't be prepared to pay extra for.
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