How to make the most profit from property development
Established property developers and letting agents, or anyone looking to get into the game, need to maximise their strategies to make the most from property development. Now is the perfect time to start as you can make significant savings like never before, and here’s how.
1. Buy from an auction
The benefits of buying property from an auction are huge. It is possible to sweep up property below its open market value, and there is no larger marketplace of properties that need renovation or conversion. There is also no quicker way to buy property, with the completion date fixed at 28 days from when the gavel drops. Maximising profit is often linked to doing your due diligence. Legal packs are available online and include documentation gathered by the auction house and the seller’s solicitor, such as title deeds, relevant searches, planning permission, and tenant leases. There is no cost for viewing these documents, and it could save you buying a property with massive structural issues or limiting your bid to reflect these.
2. Buy before the stamp duty holiday deadline
Before the stamp duty holiday, if you wanted to buy a property for £450,000, you would have to pay £13,500 in stamp duty. In contrast, you could now buy a property worth £463,500 without paying anything extra. No stamp duty extension is planned, so property developers need to hurry and ensure any purchase completes before 31st March 2021. You can check if any stamp duty is due by using this stamp duty calculator.
3. Pay the least amount of interest possible
Try to avoid borrowing money to pay for a property as you will end up paying unnecessary interest payments. The fees and costs involved with buying a house are high enough, so it’s always best to source finances that avoid these payments. For those property developers that do buy with a mortgage or loan product, aim to get the house completed ASAP and sold on to fund your next project. Once you have enough money to secure a property interest-free, you can become a landlord to help offset the costs of future development projects.
Mortgages are often the best, low-interest source of funding for property development, however if you have a bad credit rating, it might not be an option. Bridge loans can help you as they lend against that value of a property you currently own. Find out if you can secure financing in time for the stamp duty holiday deadline by contacting us.