Investing in and developing land is one of the most lucrative commodities within the property market today. However, this, coupled with the current saturation of the UK housing market, can inevitably make for a competitive industry to enter, so it’s important to do your research before you begin. We’ve put together some key considerations before you start your search.
Research and plan
As with buying any property, you need to allow yourself plenty of time to research the market, so you know what you’re heading in to. Study locations with building plots, and consider how the surrounding area may affect the development’s value: does the area have good access to services, such as power and gas? You’ll also need to factor in whether the locations you are looking at are in high demand, as this will have a significant influence on the price you end up paying.
If you haven’t invested in land lots before, note that your budget will need to take additional factors into account, such as any auction conveyancing fees, planning permission and legal fees – on top of the renovation costs you will already be accounting for.
Keep an open mind
With steep competition around finding the ideal and affordable plot, it’s important to keep your options open and be prepared to compromise. Weigh up the possibilities of investing in a plot with existing property, whether it could be affordable to bulldoze and rebuild or to rethink the building and work off it. Potential development lots often come onto auction with neglected buildings and large plots of land surrounding, so it’s a good idea to keep your eye on auction catalogues for a potential bargain.
How to finance auction properties
One of the most challenging areas of land development is funding. Lack of funding can prevent new developers from taking the next step. Fortunately, as the market has grown in recent years, with more amateur investors and first-time builders, there are several options for funding, such as short-term bridging loans or development finance. Bridging loans can be incredibly useful if you’re looking to buy a lot at auction, as funds are generally needed much faster than a standard sale, giving you time to arrange long-term funding solutions.
Partner for profit
As in our guide on scaling up your property portfolio with a partner, consider whether partnering with other developers may align with your aspirations for development. This could also provide a funding solution, without the need to seek out a loan. However, there are additional considerations when going into a partnership, such as defining clear roles for the project and setting up an exit strategy for either party.
Whether you’re looking to invest in land lots for a self-build project, or to build a profitable development, our team of experts can provide you with the guidance to help make the process of buying as stress-free as possible. Contact the Auctions, Investments and Land team today on 01273 901980 or by emailing email@example.com.