There’s no doubt about it, starting up a business as a property developer can be hugely expensive. Start-up costs, on-going staff salaries, marketing, office rent, credit checks on tenants – it can all add up.
And that’s before you’ve even considered the interest on the bridging loans and mortgages you have no doubt taken out in order to purchase those Below Market Value properties in the first place. In this article, we’ll talk through many of the costs you will certainly come across as a property developer, before going on to talk about how to help you resolve them:
Other property development costs
Surveys. Assuming you are renovating an existing property – such as turning an old school into quirky, modern apartments – rather than building from scratch, you’ll probably have to fork out a lot of money for structural issues. This includes the stuff of a property developer’s nightmares i.e. asbestos or subsidence.
Structural surveys for these type of older buildings (more than 75 years old) are also very expensive. You’ll require a top of the line Building Survey so expect to pay around £1000.
There could be further survey costs too. The Building Survey could uncover a problem with tree roots, for instance, or patches of dampness. Both of these issues would need a survey in their own right to see the extent of the damage.
Maintenance and repairs. Once your development has been completed and assuming you are renting it out, money will have to be put aside for fixing the likes of a burst pipe, repainting of the exterior of the building and fixing lighting in the main stairway etc. That’s because the upkeep of the building will be your responsibility rather than the tenants.
Development costs. Then there are the costs involved in getting the development completed. If you’re not undertaking the work yourself (and very few developers do) then you’ll have to pay for electricians, heating engineers, plumbers, plasterers – a whole variety of tradesmen, in fact. Oh, and then there is the project manager’s wages.
Materials. The contractors you employ are going to want money for materials before they begin the work. This can often be a huge outlay – especially if you’re aiming for the luxury apartment market, where tenants will expect the fixtures and furnishings to be rather more high-spec.
How Sourced can help with financing your development
Taking out a franchise opportunity with ourselves here at Sourced means you will get help with financing your development right from the off. In fact, we can provide 100% of the funding. We will also provide ongoing help in the form of marketing and admin support (these are free when you become a Sourced franchisee).