From cheap wood flooring to lavish marble bathrooms, there are many things that amateur developers have done - and still do - that not only make their developments unprofitable, but also unattractive to potential buyers, tenants or investors. The Telegraph has listed 10 common mistakes that have been made by amateur property developers in the past...
We're all tempted by the idea of buying a house, doing it up and selling it for a huge profit - or even on a more extreme or professional level, a block of units ourselves to sell to investors. Sadly it's not as easy as it appears. According to Lochie Rankin of home finding agency Lichfields, property development is fraught with traps and even in a rising market you can lose large sums of money.
Original article posted by The Telegraph.
"As an amateur it can be very easy to underestimate the cost of the build and the time it will take to complete," says Rankin.
Building in the wrong area
This is one of the most basic errors wannabe developers make, according to property consultant Simon Barnes.
"They believe it will be the nest up-and-coming area but if it's not a nice place to live, why will anyone want to spend a fortune buying there?"
"Houses on or off busy main roads and those in areas with poor transport links, for example, are always going to sell for a discount. Most amateur developers think it's easier to find an opportunity than it actually is," adds Philip Harvey of buying advisors Property Vision. "They're in competition with professionals who spend 100% of their time hunting for profitable projects."
Paying expensive rates for finance
"Don't be temped to borrow more than you can afford, no matter how much money you think you're going to make," warns Alan Waxman of property developers Landmass. "Always shop around for the best possible deal and be realistic about how much the whole renovation project is going to cost you and the time it's going to take."
Getting fleeced by the builder
"Your renovation or development project is only as good as your builder or construction company - so scope out their work first and get references from past clients. Before giving them the go ahead, make sure they've signed a fixed price contract - without this it is easy to get ripped off in the build continues for longer than expected," says Rankin.
Scrimping on quality
Yes, there are cheaper, faux versions of all the handmade tiles, oak floors and composite work surfaces used in the largest expensive developments, but they are to be avoided. As tempting as it is to buy the cheapest of everything, potential buyers will notice immediately if you cut corners. "Copying other developers but at a lower standard just isn't acceptable," Barnes says.
Even if your budget is small, choose appliances, fixtures and fittings because you know they will last, not because they resemble something more expensive. And don't scrimp on the exterior - the majority of buyers will decide if they want the property before they've stepped through the main entrance.
It's equally unforgivable to over-design and specify. According to Rankin, buyers often get put off by lavish marble bathrooms with crystal taps and silk carpets. Keep your feet on the ground and go for clean, fresh finish rather than anything too fancy.
Getting too personal
Inflicting your taste on a project alienates investors (and their tenants) and buyers. "Neutral doesn't mean boring," Waxman says., "I've definitely fallen into this trap - I wonder how many buyers will appreciate my deep blue bedroom?"
Aim to keep rooms as light as possible, giving buyers and investors a blank canvas on which to project their own ideas.
Cramming a house with bedrooms
Contrary to what many amateur developers think, more bedrooms don't necessarily make for a more valuable house. According to Waxman, buyers want quality space rather than cramped living conditions - bedroom wardrobes and dressing areas should be prioritised over irrelevant box rooms. First-time developers should focus on the layout of their project, ensuring that the rooms flow together and there is a balance of entertaining space, living space and bedrooms.
"If the space planing is poor even having a high-quality finish will not help you sell," says Waxman.
So keen are amateur developers to make a quick buck that they often start work without proper plans - or planning permission, according to Rankin. "They have totally unrealistic timescales and costing programmes," he says.
"The more you plan, the more cost and time efficient the project," adds Waxman. "Make sure you have all the necessary paperwork before you start work. You don't want there to be any problems when you come to sell."
If you're refurbishing an old house or block, you may think your property is a million times better than when you bought it but this doesn't necessarily mean it's worth a million times more.
"Greed is a major stumbling block for achieving a good sale," explains Rankin. "If your house is on the market for too much money it will sit there and go stale in today's market. Buyers are too savvy these days and have a good idea of how much they want to be spending. It's a good idea to get a property valued by at least three estate agents - and ignore the one who comes up with the highest asking price. They're probably just trying to win the instruction."
Fluffing the sale
Your bank manager might be breathing down your neck but it's a bad idea to launch your site on the market outside the optimal selling seasons of spring and autumn. "In winter everyone is busy with Christmas, and in summer they're on holiday. You've got to time it right," says Rankin.