Depending on your own property journey there may come a time when you want to make the next step and venture into property development in Northern Ireland or further afield.
When compared to other strategies, such as buy-to-let, buy and flip, HMO’s, options and rent-to-rent, property development requires even more patience, due diligence, research into future proposals for the area, awareness of risk, experience and knowledge and most importantly, more than one exit strategy.
We believe that it’s completely possible to enter the world of property development with the right team behind you. Alongside this team it’s vital that you commit time to your plans and schedules, including timescale, costings, contingencies and exit strategies.
Hopefully some of the information below will help you on your path.
Property Power Team
As we’ve previously stated, unless you’ve got the time and skills to handle absolutely everything on your own (which is highly unlikely), having a well-established, trusted property power team will be crucial to your property development success.
For a Development project of a substantial size you will require, a planning officer, architect, a quantity surveyor, a construction company with all trades attached or sourced, solicitor, and investors or a finance company. You will also need an accountant, broker, building control support and administration support to keep account of all the costings.
Click here for our detailed overview of the key people every serious property investor should have in their power team.
Types of Property Development
Property Development is simply one arm of the property investment world with different strategies and tactics. It can be Residential development or Commercial development and you can choose to sell, or refinance the development and rent. It all depends on what you have decided as your exit strategy.
Development to Sell
Property development to sell, also known as flipping, can be highly lucrative, for investors seeking a quicker return with larger profit on their money invested, with the added advantage of no headaches that you may have from tenants. It can be subject to all the usual factors such as supply and demand, location, demand for property in the area, time scales and competitive selling prices.
It’s also highly recommended that you take sufficient time to carefully plan out your project, finances, timelines and prepare yourself for delays and contingencies.
Development to Own
Property development to own, which could come in various forms including buy-to-let, HMOs, serviced accommodation units, and any commercial units, buildings or blocks is generally considered a much more long-term approach.
Having a clear picture of your ideal tenant is recommended from the beginning as this will help to define the property development. Students, young professionals, social and emergency tenants, families, guests (leisure, tourist or corporate) or business owners all have different needs and requirements.
Keep tenant requirements at the forefront of your thinking throughout this type of project.
If you plan to enter the refurbishments world you should keep in mind that “adding value” to the property should be one of your chief goals. If planned correctly, this will ultimately lead to higher returns. One way to achieve this would be to acquire a property for less than it is marketed for by undertaking proactive bidding strategies that actively seeks out the best deals.
A general rule of thumb would be to aim to add up to 40% of the initial property value back into the property. Adding value is the main aim and it may involve extending the property or developing the roof space, or completely modernizing and making the building more energy efficient.
Another strategy with good financial end value is to change use of commercial buildings to residential, all subject to planning approval.
If you lack experience in this area you’ll have to rely on your property power team to provide support, advice and guidance when determining what to do and how much value it will bring.
Know Your Area
As with almost every aspect of property investing, knowing your area and choosing the correct location is one of, if not the, most important factors in your success.
We all know that the best property in the world won’t sell or attract tenants in a deprived area but it’s also important to note that the majority of profits are made during the buying process, especially if you plan to flip, so that means it would be expensive and inefficient to target the current most popular or on-trend areas.
Where does that leave us as property developers?
We must research, carry out due diligence, think outside the box, seek out and predict future areas of growth and popularity. Here in Northern Ireland, besides doing your own legwork and investigations in person, you can also use tools like Future Belfast and council planning reports to supplement your own opinions and experience.
For more information, you can contact us here.
If you’re serious about property development, or some other aspect of property investing, we’d highly recommend you come along to the next Belfast Property Meet where you can talk, network and learn from other like-minded investors here in Northern Ireland!