5 tips for maximising the profit on property developments

Last Modified 16th of February 2021

Being a property developer is not an easy task, to say the least. With the amount of competition you have in the market, not to mention the ups and downs, it can be difficult to maximise your profits. There are some obvious tips – don’t believe in the myths, use top quality construction equipment and materials, and learn from experience. But there are also some sure shot ways to ensure that you maximise your profit and they are as follows:

1. Location is important but over-hyped

A good location is not always the area in town which is considered to be the best. A good area like this would not have any scope for any profit. Instead, a good property developer would always look for a location that is good but can be made better and thus, has great profit potential. So, instead of running blindly after great postal codes and areas with all the essentials, the focus should be on areas with great potential.

2. Profits are made while buying not selling

You will make most of your profit when you invest in the property and certainly not when you go out to sell it. Thus, it is important that you pay the exact price and try to get the best deal. The margins are always pretty slim, no matter how good the property is. A small piece of advice in this is to look for those properties where the local authority is involved in the planning.

3. Look for the right buyer

Always keep the target buyer at the back of your mind during the property development process. If the target buyers are students, then investing in top quality fittings and furnishings in the property is not prudent and you can save a lot of money. However, if it is a professional couple or a family home, time must be spent on décor. Your personal taste should not feature anywhere but only the target buyer’s taste is important.

4. Buy at auctions

Auctions provide great bargains for property developers and if you are lucky, you can find a good deal and make a huge profit. However, it is usual to get carried away when you are at an auction. So, before you bid, always set a price limit in your head and learn to stick to your bids. Auctions are like a poker game and you need to be careful not to put everything on the table.

5. Do your homework

Research about the property before you decide to buy it. Does it have structural and construction issues like asbestos or damp? Are the neighbours and the area noisy? These things can put a dampener on your sale and so, all restrictive covenants related to the property need to be researched in advance. Make sure you know everything about the property in advance and be realistic in your estimates about your profits after the cost of refurbishment. You do not want to end up with something good on paper and pretty bad in reality.

All these tips would surely make you into a successful property developer. Of course, you will learn a few tricks of the trade through experience but these are shortcuts and lessons you can use in your business.