A Property Developers Buying Guide

Posted on 16. Nov, 2011 by in Entrepreneurship

buying property

While we could all dream of owning and living in our dream homes, decorating and aspiring to lead the good life. Very often forgotten are the initial steps of acquiring the property. Here is a brief guide as to what you should look out for in your next property investment including the possible pit falls.

Location

This may not be as easy as you think. If you are entering into property development as an investment, a good location does not mean the best location in town. Buying near the city would mean the highest prices and leaves little room for profit. The property needs to be in a location that will suit a particular audience. Transportation links are often important for young professionals who want to reach the City but live in the suburbs. Popular locations will always find tenants to occupy the property. Good locations could be those that are on the fringes of a good area, which may in time be incorporated within them.

Make Money Buying NOT Selling

This may seem a bit strange and against logic, but it essentially means you need to make sure you are paying the right price for a property and not hoping market conditions will push you into profit. Paying top dollar for a swish property no matter how well furnished will knock heavily on any profits you hope to make. Search for selling properties with planning application. They may accept a decent price subject to planning permission and if later approved will hold far better prospects.

Under The Hammer

Auctions are always a good place to pick below market value prospects, provided you exercise good restraint. Set a limit and don’t get carried away. Taking along someone to act as a restraint who has no interest in the property will help keep your emotions in check. If bids don’t reach the reserve price for the property you could always try to negotiate with the seller afterwards, after all, the property wouldn’t be at auction if they weren’t keen to sell. Just remember the property you want is not the be all and end all, there are plenty more opportunities.

Avoid the Pitfalls

Always protect yourself. Think, in the worst case scenario can you still come out unscathed? Never rush into buying and have your emotions take the lead, there are plenty more deals around the corner. One mistake could lead to a financial headache that could last years.

Be sure of the surrounding you are buying into, are there noisy neighbours? What’s it like at night? Are there any restrictions attached to the property? Check out the property carefully, is there structural issues? Asbestos etc.?  There are always deals to be had, it is much a case of doing the hard work of finding them. Whatever your budget there would always be a deal to suit you. Just remember every cent saved is a cent in your pocket.

This is a guest post by Alan from IPIN Glogal

Image by thinkpanama

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11 Responses to “A Property Developers Buying Guide”

  1. If you ask me location is the most important. You can always fix up a house to look like how you want it but where it is really matters. No one wants bad neighbours, a lack of safety or to have to drive for an hour to get anywhere. When we bought our house, location was a huge factor.

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    • ShaunNo Gravatar

      18. Nov, 2011

      My grandparents have always said to buy the worst house in the best street, I think it is pretty good advice.

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  2. cashflowmantraNo Gravatar

    17. Nov, 2011

    Location is important but so is buying at the right price especially if you want to profit. Obviously getting into a bidding war is not a good idea.

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  3. krantcentsNo Gravatar

    17. Nov, 2011

    I don’t think I have the vision for Real estate development! Ehen I bought income property, I tried to buy the best location I could find at a price that made sense. For me it is all in numbers.

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    • ShaunNo Gravatar

      18. Nov, 2011

      To be really good at it I think you do need to have a passion for real estate, vision can be learned over time but some people are better at it than others.

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  4. Location and style. A house needs to be the right fit for the community. You don’t want a three story in a market of retirees.

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  5. My University MoneyNo Gravatar

    18. Nov, 2011

    I’ve always shied away from investing in real estate because of the high pain-in-ass factor that it has. I do invest in REITs within my portfolio in order to get widespread exposure to real estate.

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    • ShaunNo Gravatar

      18. Nov, 2011

      It can be a nightmare if you get the wrong tenant or a house full of problems, which is why I think new houses with higher rents are generally a better way to go. As you say though, you don’t really have to buy a house to invest in property.

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  6. RonNo Gravatar

    18. Nov, 2011

    Another thing to aspect to is look at is future interest rate movements. When the fed will move rates up the national housing values are set to fall. It would be bad timing to buy a new property just as the entire market embarks on a new downward trend.

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  7. Doctor StockNo Gravatar

    18. Nov, 2011

    Great ideas… depending on the market conditions, you may need some extra strong incentives for people coming in to look. Sometimes, location or yard size, etc. can be that stand out feature.

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  8. YFSNo Gravatar

    22. Nov, 2011

    For a property developer it is location location location. For a income property the “bad locations” are typically the areas with the best cap rates. Great post none the less

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