Developments offer huge flexibility for investors and are right on trend for the current housing demand/crisis, whichever your political persuasion prefers. But in my opinion, the biggest reason why an investor would chose to undertake a development is because it completes the circle of “investor-hood”, and offers great financial upside at the same time.
Investor-hood isn’t a word you’ll find in any dictionary, but is one we here at Sourced have coined to recognise the transition and evolution of an investor through their investment life cycle; taking them from cradle to grave so to speak, but hopefully not literally.
The investment life cycle is similar to the human life cycle in that all investors start out as new to the world e.g. birth, before eventually graduating through the many different phases of the cycle e.g. teenager to adult; depending on the frequency, type and success of their investments to date.
The final phase and Holy Grail for many property investors, is to reach property mogul status. But what makes a property mogul different from any other investor? The answer is… Developments!
This isn’t to say that developments aren’t an option for all other types of investors because they are, but the reason why developments help define the “mogul” tag is because in order to execute them well and profitably, an investor is required to draw upon relevant experience, a substantial network and financial resources. All factors most other types of investors just don’t have.
To further understand the appeal of reaching the top of the property investor tree, we need to peel back the intricate layers of the investor psyche. Now I’m not suggesting that all property investors are alike, but there is a common theme running through those I have had the good fortune to have met; commitment, competitiveness, optimism and single-mindedness. They too all appear to share a desire to reach one of, if not all, of the following destinations:
• Financial freedom
• Secure future
• Own boss
• More time
With this in mind, some might say becoming a property mogul is in your DNA. While this may be true, one thing that is for sure is that undertaking property developments can help any investor reach the pinnacle of property investing game.
But developments don’t just serve as a self-affirming hobby; they can also be very, very financially rewarding. To try and put this into perspective, let’s look at a real-life example of a development opportunity that Sourced Developments are currently working on in Cheshire:
• Address – Winmarleigh Street, Warrington, WA1
• Location – Large town centre (population of over 200,000)
• Within walking distance – Train station (direct London line), shopping hub, local college
• Starting point – A commercial building (formerly residential) with planning permission for 5 apartments with adjoining piece of land currently used for parking
Following consultation with our architects it was agreed the development should remain as two separate matters; the first being the redevelopment of the building in to 5 apartments, the second involving gaining planning permission to develop 10 brand new apartments on the land currently used for parking. Once complete, the profit for this development is estimated to be £500,000 net of fees and buyer discounts.
Not every development will result in such a return and not every development will seem as straight forward. But as the saying goes: “You’ve got to be in it, to win it!”
If you’re interested in investing in developments, get in touch with the Sourced team.
Alternatively, if you’re looking to start your own property developments, take a look at our franchise opportunity and see how we can help you to achieve financial freedom.