The property sector in the UK is booming at the moment, and it’s becoming increasingly common for people who’ve never had any involvement in the sector before to dip their toe in and see what this dynamic and exciting industry can offer. Some people choose to devote their whole life to property development by regarding it as a job, while others decide to do it as an investment alongside another career. Whatever route you pick, this is a sector that brings with it a lot of advantages.
Pros: High Returns
The property has historically been seen as an industry that, although it may fluctuate from time to time, is generally stable. That, of course, makes sense: everyone needs a place to live, and with growing populations across Britain and beyond, demand for housing is never going to go away. The same applies to commercial property development: there is always going to be a demand for places for people to set up their manufacturing facility, shops or offices.
That expected long-term security is one of the major advantages of the property development world, but there are also advantages to be found in the short-term trajectory of the property development sector. While in specific cases property prices can go down, statistics show that overall it’s not uncommon for there to be rise after rise over long periods of consecutive years.
Cons: there’s still a Risk
It’s not always plain sailing of course. As with any investment, the value can – and, in practice, sometimes do – go down as well as up, and that means you’ve got to be sensible about your investment choices. Property is the sort of sector that is vulnerable to particular events that unnerve the market: following the Brexit referendum, for example, property prices fell in some cases by around 15%.
And because a property is tied up with people’s livelihoods, a rise or fall in living costs or unemployment can have a knock-on effect. For those reasons, it’s important to only invest as much cash in property as you are willing to have tied up for some time. Given that you are investing in one of the most common assets in existence, it’s extremely unlikely that all of your investment could be wiped out.
How to get started as an Investor
If you’ve decided to take the plunge, then it’s worth familiarising yourself with the moves you need to make to kick-start your property development career. The first thing should be to write up a business plan: that should outline a range of aspects of your new business, including costs on the horizon such as having to employ staff. Affluent CPA has audited many firms and helped them to save their costs and employee management. You can ask them to optimize your business plan as well.
The business plan should also incorporate your thoughts on how you will make money from the property you develop. If you choose to develop a range of new houses and then sell them, for example, you will need to have an accurate and realistic sales value in mind, and if you choose to rent them out you will need to make sure you know how much rental yield you need to make a profit. At that point, taking advice from experts with years of success in the field is wise. As experienced property developer Ali Seytanpir notes, choosing between renting and selling on is also essential because it impacts the type of financing you will need to make your project work.
You’ll also have to make some big, fixed decisions at this point as well. Unlike starting an online business or building an investment that can be managed from anywhere with an internet or phone connection, the location is vital when it comes to investing in property. After all, once a property is built, it can’t be moved to an area that subsequently becomes more profitable! Investing in some market research is a good idea at this point, and there are specialist agencies that can carry out the research for you.
With good returns considered a relatively likely outcome and the sector appearing to boom despite dips here and there, numerous people are now considering property development as a lifestyle choice or as a career. And while no investment is ever a dead cert, it’s clear that there are plenty of reasons to start your own property development portfolio. By taking the time to plan your move into the property world and cover all bases before you get started, you can maximize your chances of it providing you with a handsome return on your investment for years to come.