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Ah, property, that age-old game where people can invest in something tangible and make money. Buying-to-let, house flipping, commercial leasing opportunities, buying to enjoy the appreciation – there is a multitude of options that all end in the same place: profit. But for all the financial benefits these routes offer, there is another option that is becoming increasingly popular in the “I want to make money through property” game and that is self-builds.
It is that chance to use vacant land and create something unique that you think will sell. It is having a hand at every stage of the process and leaving nothing to chance. It is making sure you aren’t left exposed to lower offers in any area. By nature, going down this route is tough, really tough, and stressful from the get-go. But it is also incredibly rewarding, both intrinsically and financially.
To make sure of this, we have pulled together a few words of advice to make sure your first self-build project is a success. All you have to do is read on.
Don’t Wait For The Perfect Plot
There are very few perfect plots out there. That’s a fact. Pretty much all of them have some drawbacks or another. Your job is to look past these and figure out how amazing a plot can become and what it will take to get it to this stage. Don’t be one of those people that drives past plot after plot you rejected only to see what someone else has done with the opportunity once presented to you. It is somewhat soul destroying.
Know The Language Spoken
This is one of those industries that changes more than Beyonce on a world tour. The attitudes to certain processes change, the regulations get updated and new disciplines enter the fold, as does the vocab that is spoken. Your job is to adjust to these, learn all you can and adhere. To protect yourself, your best bet is to surround yourself by those in the know. That means getting Poms & Associates construction liability insurance, it means hiring an architect that understands the new rules and regs, and a project manager that can manage the new disciplines. You don’t want to get three months into a project only to be told your building no longer keeps up with legal requirements.
Nothing Beats A Budget
The only thing that tends to ruin a self-build project is a misjudgment on the budget front. That’s it. Running out of money is the single biggest project killer. That is why you need to work out what the total budget is before you make any moves. The cost of the land, the time spent designing, transport costs, legal costs, materials, labor, weather delays and every other teeny-tiny detail. Then add about 12% on to this because that contingency will drastically reduce the amount of stress you have to shoulder. So, work out how much you have to play with, what liquid assets and equity you have available and what your borrowing capacity is, then go from there.
Know What The Endgame Is
Some people tend to go down the self-build route with every intention of living there for a bit before moving on and doing the same thing all over again. Others do this simply as a way of getting the ball rolling, their portfolio growing and securing the money for the next project. Whatever your intentions are, you need to know this is the plan and how that affects your decision. By building a property with the intention of selling it on as soon as possible, you need to keep an eye on the market, resale values, and what is deemed desirable by buyers at the moment. By doing this you will create a property that attracts a larger proportion of the market and that is what will lead to a bigger profit margin.
Imagination Is Worth More
The more imagination you can hurl at your project the better your chances of being able to save money. We’re talking about having an imagination when it comes to the materials you use, where you source certain parts from, working with your designer to reduce costs on the structure and making less expensive alternatives look a million dollars. It could be that you want to save money on insulation by using straw and wool or opting for a kitchen island that is constructed out of concrete or any number of things. That is what will help you maximise your budget.
Avoid Paying Anything Upfront
We know that may sound hard, but the less you can pay upfront the more you can stay in control of the situation, and that is what you want. There is absolutely no need to be paying large sums of money upfront, so don’t feel you have to. The contractors you are using will no doubt be paying their laborers in arrears, and the materials they use will be done the same way, eight weeks on from delivery. So, the rush to pay upfront is not real. The dangers of doing so, however, are. That is something you need to accept and realize.
Don’t Just Accept A Quote
No matter what area of the construction in question, it is a market and that means it is competitive. With that in mind, don’t just accept a price. Instead, check it out, ask for quotes from different places and play these quotes against each other. You’ll be amazed by the amount of “wiggle room” your suppliers have as a result of their markups, meaning they can offer substantial discounts if you know how to play the system, and that is what you need to do. You need to make them want your business and to make them the most attractive option. Try and keep this to just materials, though, not labor. That is when it becomes risky. You don’t want to pay someone less only for them to get that difference back by cutting corners with their work. That spells total disaster.