If you’ve ever spent a lazy afternoon watching daytime then you’ll probably be familiar with the idea of property renovation. Shows like “Home Under the Hammer” have glamorised the career of flipping properties to the extent it’s now one of the UK’s most desirable second jobs.
Renovation (or property development) refers to the process of buying or inheriting a property known colloquially as a “fixer-upper” and then renovating the property before selling it on at a higher price. The profits are whatever the difference is between your expenses and the profits from the sale.
It’s a business with plenty of advantages. For example, property developers work their own hours and they work for themselves. There are also not many overheads associated with it as long as you do most of the work yourself. Once you start bringing in construction crews, those prices increase exponentially, of course, but if you are a keen DIY enthusiast, that shouldn’t be an issue.
How do you go about getting your start on the property development ladder though?
Business strategy
This isn’t just something you can jump into with both feet. First, you’re going to need to set out a firm strategy. This will include how much you can afford to spend, where you want to search for property, what kind of market you’re looking at and any material costs that will be incurred by the job. It’s a big commitment and if you don’t have a plan ready, you could end up losing money.
Insurance
Particularly if you’re going to be doing a lot of the work yourself, you’re going to need builders insurance at the very least as well as any insurance for your work vans. You’ll also need to sort out licenses. For example, all gas work must be done by a gas safe engineer and all electrics must be installed by a licensed electrician. You can cut corners in other areas but not where insurance and licensing is concerned.
Form a legal entity
You’ll also need to set up yourself as a sole trader, partnership or limited company to do your work officially through. This is the business you will pay tax through and that will claim all legal responsibility for the property work.
Find your niche
Are you going to buy a large house and segregate it into lots of rooms to form student housing? Or are you going to make it into a great home for a first-time buyer? Have your final renovation goal in mind from the very start and that includes before actually buying the first property.
Take your time
If you rush the job then it’s easy to get carried away and spend more than you need to. Renovation can take months and even years so be aware that you’re in this for the long game and don’t get distracted by the little things. And never be afraid to ask your friends and family members for help!