The rising cost of owning a property, the stagnation of pension plans from jobs and the desirability of certain locations all combine to make housing a good choice to go into as a business. Becoming a property developer is an attractive choice to top up your retirement income. In addition, you may earn a good return on your money when you look at your financial planning.
Getting Started In Property
If you intend to be hands-on with the business, you may consider picking up a side trade such as electrics, plumbing and carpentry. This will help even if you’re planning to contract the work out with CIS registration. You will be able to correctly diagnose issues and assess the condition of the problem. It also helps to be able to do minor repair jobs yourself from time to time. It’s also a good idea to form a corporation, as this gives you some protection from personal liability. A good small business attorney should be able to help you get set up correctly. You may also need to find financing for the first property, so find a commercial loan lender. Make sure you look at the Small Business Administration website for information on how to get through the approvals process.
Get Your Network Together
Once you have the funding in place, it’s a good idea to develop a network of subcontractors. Your local Chamber of Commerce is a great place to start. Look up HVAC specialists, carpenters, electricians, masons, roofers and landscapers who can help you to turn your investment into a dream home.
Making Money From Housing Stock
You have two main options to make your property pay. You can either sell it or rent it out. Put together a business plan like you would for any other venture. Be sure to include a financial forecast to project your return on investment. Ideally, look for a 30% return on investment. This should come on top of the costs of the renovation work, purchase price and the costs of reselling, and legal fees. The money you make needs to be enough to cover your living expenses while you’re working on the project as well.
If you’re planning to lease out the house rather than selling it when the work is complete, then you’ll need to consider it’s rental yield. This is a percentage of the total amount of rent minus the running costs by the total amount invested to purchase the property. If you go into the venture knowing your figures, it’s going to be all the better for you. You’ll soon be on the way to making great money.
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