It can seem like developing property to sell it on for a profit requires little or no experience, and there is certainly money to be made.
However, the reality of developing property may not be as glamorous and fun as it looks on TV.
What does property development involve?
Being a property developer means buying a property, developing it through renovation, then either selling it on for a profit or renting it out to tenants.
This can often involve buying a property that is cheap because it needs to be updated and renovated through new furnishings, repairs and maintenance.
Buying a property cheaply means that once you have injected new life into it, you should hopefully be able to sell it on for much more than you originally paid.
Why be a property developer?
One of the most appealing things about property development is that anyone can do it. Technically you do not need any qualifications or training to get started. Anyone can become a property developer simply by buying a house then selling it on for a profit.
If you are a creative person, have ever fancied yourself as the next Laurence Llewellyn-Bowen, or you simply enjoy DIY, property development can be an ideal pastime.
Plus of course, if you get it right the financial rewards can be substantial, particularly when you start to build a portfolio of renovated property that has been sold on or rented out.
What are the risks?
It is not worth even considering property development unless you are in a very stable financial position.
Taking on a property to develop is a serious commitment, and if you get it wrong, you could end up in a lot of debt with a property you cannot shift, and even face losing your home.
What extra expenses should you expect?
Developing a property will almost always incur unforeseen costs, so you will need to set aside cash to make sure you are able to cope with them.
Simply buying a few furnishings from IKEA will not be enough to add much value to a property. You will also need to budget for:
Having a structural survey done
Fees you may have to pay to external agents
Structural issues like subsidence or even asbestos
Maintenance and repairs
What if you have existing debt?
Developing property represents a huge financial commitment because it involves the initial outlay of buying the property, then the significant expense of doing up that property and arranging for it to be sold or rented out.
If you have any debts or your daily finances are being squeezed in any other way, now is not the time to start trying your hand at developing property, as you will only plunge yourself into further debt.
Research properties before you buy
To give yourself the best chance of success, you would have to know the market inside-out:
Find out how much other properties go for in the area
Decide on who your target buyer or tenant might be
Find out about stamp duty
Buying an already built property is not the only way forward; read our guide to find out whether building your own property could be a better option for you.
Alternatively, buying a repossessed property and renovating it could be your cheapest option.
What else should you consider?
Property development involves a significant amount of research and capital before you can get started, and will require a huge investment of both time and money.
If you decide it is for you, start off small with your first property, and only move on to bigger projects as you gain experience and confidence.