One of the problems with property development and investment is that everyone thinks that they can do it and make a small fortune in the process. Sadly it isn’t as easy as it appears with numerous traps to avoid and the very real chance that you could actually lose money. Here is our list of the most common mistakes along with some suggestions on how to avoid them:
Buying in the wrong area
This is a basic and fundamental error. Houses on busy main roads and those in areas with poor transport links may appear a bargain but ask yourself would a tenant or a potential buyer ever actually want to live there? Do your research and remember that true bargains are very few and far between.
Getting fleeced by tradesmen
Whether it is a complete renovation or a quick “lick & flick” you are likely to be at the mercy of a tradesman or two. To minimise any nasty surprises at the end of the project; carefully scope out the work, ask for references from past clients and insist on a fixed price contract.
Scrimping on quality
As tempting as it is to buy the cheapest of everything, most potential buyers and tenants will notice immediately if you cut corners which will reduce your margin as they will use this as a way to negotiate down your asking price. Even if your budget is small, choose appliances, fixtures and fittings that will last – for landlords this is an investment against having to replace/repair everything too quickly.
Getting carried away
It is equally stupid to waste your potential margin by spending too much. Remember that this isn’t your home so keep things clean, simple and sensible.
Getting too personal
Remember that your potential tenants and buyers may not share your passion for flowery aubergine wallpaper. Aim to keep rooms as bright and light as possible giving tenants and buyers a blank canvass to work with.
Cramming in too many bedrooms
Contrary to what many amateurs think, more bedrooms don’t necessarily make for a more valuable property. Buyers typically want quality space rather than cramped living conditions – bedroom wardrobes and storage should be prioritised over irrelevant box rooms.
Amateurs often make the mistake of starting work without proper plans or even planning permission. Whilst it is easy to get excited on your first project, the more time you devote to the planning stage, the most cost and time efficient the project is likely to be.
Not knowing when to trust
You might think that you know how much your property is worth, but it is worth consulting the experts for a less emotional opinion. You may also think that you can save some money by renting out your property privately rather than paying an agent but think carefully about all of the implications of this – do you really have the time or expertise to handle all of the paperwork, viewings, referencing, tenant communication and rent chasing yourself?