How to become a property developer: The insider’s view
One developer shares her property business story and practical tips on overcoming challenges, the best resources and potential opportunities...
About our insider
Founder: Samantha Cansfield
Tell us why your property business stands out?
I strive to provide good quality homes that my clients would want to live in along with a superior customer service. I always respond to tenant enquiries and maintenance issues within a few hours and as a small business owner, clients benefit from a more personal and efficient service compared too many of the large estate agencies.
Also, my properties are presented to market with a medium to high specification to ensure that they are sold as quickly as possible for the highest price but are still priced within the reach of most of the general population.
It all started when I purchased my first flat. It required a complete refurbishment and I found the process and work really enjoyable. A year and a half later, property prices had increased and my flat was worth £20,000 more than when I purchased it.
I realised what a vehicle to wealth property could be and I went on to purchase, refurbish and keep or flip a number of properties.
What was essential to get the business up and running?
I started out with very little money so I think resourcefulness, drive and determination were the key as I had to balance the business with a job. After work and at weekends, I found myself stripping out kitchens and bathrooms, organising trades, painting and decorating etc.
In regards to growing the business, finding a competent builder and building my support team was essential. Initially I used my team of solicitors, individual trades, mortgage broker and accountant that I used for the rental side of the business but in order to go after larger projects I needed an architect, trusted builder and planning consultant.
What is your average working day like?
It is very varied and busy as I’m still small, I have to get involved in all aspects of the business.
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My day usually starts at my desk at 6am, where I plan my list of priorities and schedule, answer emails and carry out administrative tasks. After I usually have various meetings; such as a 9am with a builder who is pricing up external insulation for a property and then a meeting with a property investor to discuss potential joint ventures.
This could then be followed by meeting with a plumber to try to ascertain the source of a leak, a fire safety & maintenance inspection, a visit to check on traders who are in the process of refurbishing one of my properties, another meeting with a property investor/developer just before attending a property viewing from 6pm until late.
What rules do you have for how you approach each property?
A well know property mantra is “you make your money on the way in” so I always try to purchase below the market level.
This is not always an option so I also look for properties where I can add value. For instance it may be a property that is run down and requires refurbishment or there could be some sort of planning gain (property that could be extended, split in to two or even turned into a number of apartments).
What’s the biggest challenge for property developers right now?
There is a lot of competition so land and property is very expensive, which is a big barrier to entry for new developers. Also difficult planning officers and planning delays can add uncertainty and cost to the development.
What’s the best business advice you ever got?
There’s a few, all of which were equally important:
- Leverage other people’s time and expertise. I had until a few years ago always done everything in my business myself. When you are starting out and have limited funds this may be the right strategy but in order to expand you must leverage other people.
- Systemise your business as much as possible and repeat, repeat, repeat.
- Get a specialist accountant. I did not employ a specialist property accountant for many years and I missed out on a substantial amount of tax allowances that were due to me on my HMO (house of multiple occupation) properties.
What do you think the property market will look like in two years? Where are the opportunities?
I think this question will be answered differently depending on where you live in the UK. In Hertfordshire I see the market remaining buoyant and prices continuing to rise.
Across the UK, if the government continues to give permitted development rights for offices to be converted to residential units, then more and more developers will explore this opportunity as developers can bypass the planning process and are able to create much more compact units in urban centres where space is at a premium. This benefits the developer as he or she gains volume of sales and the consumer as the entry point to purchase is much lower due to the smaller unit size.
In rural areas permitted development rights have been given for the change of use of agricultural buildings to residential use so I would envisage more developers taking this up.
What’s the best resource for property business owners?
- There are a number of large training organisations such as the property investors network (pin) and Progressive Property Network (PPN) that are a great resource not only for the training they provide but for the networking opportunities they give.
- To increase general knowledge, a subscription to Property Investor News and Your Property Network magazine is extremely useful. Both of these publications look at the industry from the investor viewpoint rather than the landlord.
- Assuming you’re also a landlord I would recommend joining the National Landlords Association or Residential Landlords Association. These associations are an invaluable source of information regarding the latest legislation and news affecting the industry.
- On the accounting side many of my peers are now using a software package called Xero. I use a software package called Landlords Property Manager, which covers both the accounting side of my business and the tenancy side. A cloud based version that allows access from various devices is far more convenient.
- Basecamp is an excellent online software package that helps manage multiple projects at a time.
What regulation affects you the most as a property developer?
Community Infrastructure Levy (CIL) requirements, which are imposed by many local councils, as they can add large additional costs to the development and can sometimes make the project unviable.
What’s the biggest misconception about being a property developer?
I think that some people have the idea that property development always returns huge profits. While high profits can be achieved, it is usually at the end of a number of months or years of development. In my last project I split a three double bedroom house into two one bedroom houses. This took a great deal of time, energy, money and resourcefulness. I did not receive any money back from the project for seven months and it could have been much longer if we had run over schedule and had not found a buyer for one of the houses so quickly.
It can take months of analysing potential deals before finding and securing a project so this time also needs to be built in to your forecasting.
If you launched your company again, what would you do differently?
I would have taken on a property manager much sooner so that I could free myself up from the job of being a landlord. I would also have made it my priority to find a decent builder to manage projects entirely from start to finish rather than deal with the individual trades myself – this saves a lot of money but the time could be better spent looking for more deals for the pipeline.
If you’re interested in becoming a property developer, check out our comprehensive guide on how to start a property business or read these 8 simple steps to property development success.