Nicole Bremner gives us her top tips on how to become a property developer.
Property development can be a difficult area to break into, particularly if you have other commitments to think about.
We spoke to Nicole Bremner, who went from being an investment banker and an at-home mum-of-three to a successful property developer, about how you can get into the game.
What is property development?
Property development can be purchasing a property and improving it for financial gain.
It can be cosmetic refurbishments, like splitting the house into flats, turning a residential property into a commercial property or vice versa. It can be anything in-between.
What tips do you have for people who are starting out in property development?
I didn’t realise that little people like me could be property developers.
I started working on my own flat, then I took my savings and did up another property.
Here are my top tips for beginners.
You’ve got to be very passionate about it as a career option
First, develop your strategy. What attracts you to property development? What do you want to do? Then you’ve got to decide how much you want to invest and whether you want to run it yourself.
It’s important to build a brand too. You’ll have better luck in business with a brand rather than just your name.
Develop a power team
Find a good accountant, architect, builder and conveyancer. They should be people that you enjoy working with.
A lot of finding a power team is word of mouth. Many of us have friends – from your kids’ school, from the office – who have renovated their home. Try and get some good feedback.
Facebook is inundated with recommendations like PropertyTribes and Property Fortress.
The best place to find a builder is through your architect; even if they’re a bit more expensive, the process is so much smoother.
There is a small number of bad apples. Look for someone who submits quotes on time and has systems in place, not just trying to make a quick buck.
Set a budget and stick to it
Time is money. It’s very easy to go over. I’ve seen people under budget in time and money.
I wish I’d been much more controlled in my cashflow when I started out. You can’t spend too much – it’s not your home. It has to make money or there’s no point.
Pick a patch
I’d recommend a local patch – somewhere you walk and drive all the time. Get to know it really well: what’s for sale, what’s recently sold, property price per square foot, house price and demand in the area.
Just don’t get too emotionally tied to that area, which leads onto my next point.
Be ready for emotional ups and downs
There are the highs of being accepted and the lows of being gazumped. There are more highs and lows in property than there are in investment banking!
I find it very rewarding.
Any good places for property development?
This question is difficult because you’ll ask five people and get five different responses.
Croydon, Stratford, Wembley and Nine Elms have a huge concentration of flats on the market so it’s hard to stand out and make a difference.
Again, stay around your work or home. If you’re sitting in London, renting in the north east, it’s easier to be ripped off. Think of the commute, the trust you need to have. You could go for larger areas where lots of big developers have started redeveloping. They take the initial hit and you can make some nice money there.
Starting at home has tax advantages and it’s cheaper – there’s no better way. Just make sure there are no stipulations around your mortgage. Speak to your adviser first.
Which developments add the most value to a property?
The kitchen and bathroom make a huge difference – keep it clean and simple. Take away any personal taste from the house so it appeals to the widest market. Nobody wants magnolia!
If you want colour, do it in soft furnishings which can be removed. Don’t make the permanent fixtures contentious. I once put designer tiles down. It didn’t go down well.
Don’t overlook the garden, as many people do. It’s the biggest room aside from the living room and kitchen.
Where do you find inspiration?
Factual reality programmes on truTV (Sky channel 185, Virgin 212, Freeview 68) has interesting shows which reveal the ups and downs of property development. They’re really inspiring.
And of course, you can’t beat Homes Under the Hammer!
What surprise costs should you be watching out for?
Getting cash together is stressful, contractors not keeping to schedule, contacting utilities (can take up to nine months!)
Another overlooked cost is waste and skips – 15 skips can cost £150-£200.
There’s the Construction Industry Scheme where, if you’re paying contractors you’re subject to tax on the labour. That means if you pay a tiler £100 a day you’d be liable for £120 because the CIS tax is 20%.
You’re also liable for tax on profits, Capital Gains Tax and other taxes.
Archaeological surveys cost £5,000-£10,000 each as well.
How long will it be before I can make a reliable income?
Buy to let landlords start getting money when tenants move in, but property development is lumpy. It takes three to five years to have enough cash to invest in different projects to smooth out income.
It’s good to work with other developers 50/50 on a joint venture. I’m not reliant on one project to deliver my full income. I have various projects finishing at different times.
The end is most rewarding. There’s pride in completing something which tenants or buyers move into. I’ve even been invited to housewarming parties. You’ve got people who absolutely love the space they live in.
You can find out more about Nicole by reading her book, BRICKING IT, which comes out on 13 October.
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