We have the pleasure of meeting lots of lovely buyers. The most fascinating are the developers – they know their stuff and they are always on the hunt for a great deal. We sat down for a coffee with the best developer we know and asked him for his advice on how to make a profitable first investment.
TIMING IS KEY
If you wanted to invest in London, for example, the market is somewhat unstable because of Brexit. But then again London is one of the most important international cities in the world. I believe the growth and opportunity will continue to be there in the near future. The opportunity to break into the market is probably better today because the market will continue to rise.
RAISE FUNDS SENSIBLY
You can look at crowdfunding. Or you can approach your friends, family etc. Be wary of lenders with excessive interest rates – say 10 or 15 per cent – that can very quickly cut into your profit and make the whole venture untenable. (However beautiful the property is, especially if it’s a single home or apartment or flat, it may take a while to sell.) If you loan from a bank, I think a logical and acceptable interest rate to pay is five per cent or less.
LOCATION LOCATION LOCATION
Look at areas that are up-and-coming as opposed to established. Go to a location that is still slightly on the fringes but has an infrastructure – pubs, cafés etc – that makes it a comfortable place to live.
Find a property you would actually live in. If you don’t like it, why would somebody else? By personalising it you get a better product. Look for a challenge that you feel, on the basis of your expertise or advice from friends or colleagues, you might be able to transform into something much more exciting.”
GET SOME ADVICE
There is plenty of help available and it doesn’t cost much. Speak to architects and designers. If you’re refurbishing a property, speak to agents, ask what people like in the area, what the demand is. You shouldn’t necessarily go against the trend; you should go with it – provided the trend appeals to you.
A SMART PURCHASE
The most important thing is that you buy well because then you’ll be able to sell well. When I look at property, I look at my risk in terms of losing money; I don’t necessarily look at my profitability. Selling well is a matter of luck and timing; buying well – that’s good negotiation skills. Look for sellers that need to move quickly and take advantage of those opportunities as you might be able purchase below market value. If a property has been on the market for a long time, say you’re interested in buying but not at the price they’re asking.
PARAMETERS FOR SELLING
Think of your expectation and think of a minimum (x) and a maximum (y) target price. Ask for y – which might be a high number – and then if someone wants a discount, providing it’s more than x, then sell it.