How to Become a Property Developer and what are some Alternate Investment Models?

A Story by allanbrown011

London property developers considering buy-to-let scheme have to take into account the rental yield

With the property prices supposed to rise by 25% in the next 10 years and with the introduction of government schemes such as ‘Help to Buy’, there is greater access to funds for buyers. Buyers can use available funds in order to finance their property. If you are looking to start a property development business and wondering whether to go for part time or full time work, you should ideally have a business plan prepared for yourself. Set up your goals and determine what you wish to attain through the property development venture. Then, London property developers can prepare step-by-step outlines in order to attain the goals and objectives. Here are some tips to developing a property successfully.

Identify your exit strategy as a property developer

In the entire business plan, one also needs to determine or identify the exit strategy. You can either go for a ‘buy to sell’ strategy or ‘buy-to-let’. The latter one is the more long term strategy whereby you can have an extended property portfolio to completely replace your present salary. Although buy-to-let mortgagesare easily available, the income generated from the rent is taxable. If the tax is classed as ‘higher’, you may be taxed 40% of the total income. Thus, you may go for a‘buy to sell’ scheme to increase your capital. Other factors also need to be considered.

Considering rental yields for buy-to-let

London property developers consideringa buy-to-let scheme have to take into account the rental yield. Whether it is ‘buyto sell’ or buy-to-let, you need to consider the rental yield. You need to be prepared for the volatile market and understand that during a recessional phase you may get stuck with a property with few means of selling it. Rental yield is evaluated by taking into consideration the value of the property and the annual income through the rent. If the final figure is 10% of the value, it is thought to be a strong gross yield. In fact, your income will surely increase when the number of occupants increase.

Consider the location

If you are looking to develop a property, always consider the location. Location is the key to everything. If the developer is knowledgeable, he/she will be able to spot a location where the prices are deemed to rise.

Buying at a sensible price

The plot needs to be bought at a price which is sensible. To make this happen, you should undertake market research to find a plot which is priced reasonably.

Do not hurry and buy hurriedly

Real estate agents will propel you to buy the property quickly and say that the deal must not be missed. But, you need to use your brains and choose the right property at the right time. Timing is the key to earning profitas a real estate developer.

Alternative investment must be considered

Apart from earning from property development, you may also consider alternative investment to diversify your investment portfolio. You can invest in gold, hedge funds, stocks, shares, stamps, wine, etc.

Whether you become a real estate developer or go for alternative investments, they must bring about profits and improve your earnings.