Article Categories

»	Arts & Entertainment
»	Automotive
»	Business
»	Careers & Jobs
»	Education & Reference
»	Finance
»	Food & Drink
»	Health & Fitness
»	Home & Family
»	Internet & Online Businesses
»	Miscellaneous
»	Self Improvement
»	Shopping
»	Society & News
»	Sports & Recreation
»	Technology
»	Travel & Leisure
»	Writing & Speaking

Reprint Article Code

Category: Articles » Finance » Wealth Building » Article » Article Code

Become a Property Developer

Become a Property Developer with Little Capital A property developer makes improvements of some kind to property, builds on land and thereby increasing its value. The developer may be an individual, but is more often a partnership, a Limited Company or a Public Limited Company. There are two major categories of property development activity: land development and building development (also known as project development) the later being the most popular with the smaller developer. Land developers typically acquire raw land (i.e real property with no improvements or infratucture) and improve it with utility connections, roads, etc. ... read more

Article Title:

Article Body:

Become a Property Developer with Little Capital

A property developer makes improvements of some kind to property, builds on land and thereby increasing its value. The developer may be an individual, but is more often a partnership, a Limited Company or a Public Limited Company.

There are two major categories of property development activity: land development and building development (also known as project development) the later being the most popular with the smaller developer.

Land developers typically acquire raw land (i.e real property with no improvements or infratucture) and improve it with utility connections, roads, etc. Building developers acquire raw land, improved land, and/or redevelopable property in order to construct building projects. The buildings are then sold entirely or in part to others, usually for a significant profit.

This is all well and good but how does the small property developer get started?

Small projects, terraced properties, shops, small offices, buying property in auction, these are all areas that the small property developer can consider. There is an old saying that goes, "you should start in the area that you know best." The reasoning behind this is obvious, as the area will be known, prices will be easier to determine and profits can be readily calculated.

Cashflow is king for the property developer as capital should be available for the initial purchase, as well as the cost of improvements, purchase costs and sale costs.

Buying a Small Terraced House for Profit
 
Lets look at the classic case of buying a small terraced property with potential. The fees for the purchase will be as follows:-

·	Initial Purchase Costs		- £75,000
 
·	Initial Surveyors Fees		- £200
 
·	Purchase Solicitors Fees		- £400
 
·	Improvement Costs			- £3,000
 
·	Cost of Sale (Estate Agent)	- £800
 
·	Solicitors Fee (Sale)		- £300
 
	Total Cost				- £79700

On the assumption that the property can be sold for around £90,000 - £95,000, the property developer could make a tidy net profit of between £10,300 - £15,300 and depending on the timeframe from purchase to sale, this could be the equivalent to earning of around £50,000 to £60,000 per year.

All this is well and good if you have the capital to be able to buy the property for cash but what if you haven't. Well, let's assume in this case that the property developer can only lay his hands on £25,000 as a maximum. This is how this could work: -

Plus the cost of borrowing 
 
£56,250 for say 3 months			- £2,109
 
Less extra Solicitors Fees			- £500
 
Loan Arrangement Fees			- £1,125
 
Total extra cost of borrowing		- £3,734

Based on the assumption that the property developer was borrowing 75% of the property value for a three month period would reduce the profit margin to a net profit of between £6566 - £11,566.

This hypothetical situation shows that ideally the property developer is better off financing the scheme from their own funds but as well as this profits can still be earned even though the majority of the money is borrowed.

Author Bio:

Some other recently published wealth building articles

E-Currency Exchange: Learn Before You Burn by Paul J Malacara
When you think about e-currency trading, what do you think of first? Which aspects of e-currency trading are important, which are essential, and which ones can you take or leave? You be the judge. Truthfully, ...

How the Rich Hide Their Assets by Rocco Beatrice
It's very simple, how the rich hide their assets is not to hide them at all. The rich use laws to protect their assets. They use legal entities created under the different laws, trust ...

Asset Protection Trust by Rocco Beatrice
What's an asset protection trust? What's a Trust? A "TRUST" is nothing more than a "CONTRACT" between the person who wishes to protect his assets (the Grantor) the person who will manage the assets (the ...

Protecting Assets from Nursing Home Costs by Rocco Beatrice
Protecting assets from nursing home costs is the latest challenge for seniors where government is demanding an uncapped spent down of their ...

Medicaid Asset Protection by Rocco Beatrice
As tax preparation time begins, many seniors are asking to include Medicaid asset protection as part of their tax planning strategies. For those of you not familiar with the 2005 Tax Reduction Act, some of the provisions ...

How to Hide Assets by Rocco Beatrice
In social functions, I always get asked about how to hide assets? From who are you trying to hide your assets from? Is there a legitimate way to hide your ...

Publisher Guidelines

You may reprint this article electronically in your newsletter or on your website, free of charge.

If you reprint this article from our site, then you must keep everything intact. This includes the articles title, author name, articles body, authors bio / resource box, the links contained within the article, all copyright notices and the link pointing back to our site. All links within the article must also be made active / hyperlinks.