Eliminating the 3 Big Risks of Property Development

By asadjameel001 at 14 days ago • 0 collector • 24 pageviews

Let's take a look at some of the risks of property development. Undertaking your first property development project is more demanding and involves more risk than buying your first investment property. But although there are more things that can go wrong, there is also opportunity for increased rewards. The greatest risk I believe to the first time developer is inexperience or lack of knowledge.

The good news, however, is that with the help of experts and the advice of specialists the risk that inexperience or a lack of knowledge bring, can be overcome and common pitfalls avoided.

This will fast track you on the road to becoming a successful developer. Now let's take a deeper look at what I call the 11 big risks.

Risk 1 - Inexperience

The key to eliminating this risk is to always ensure you have the input of a professional property development specialist, especially on your early projects. Not having this assistance could affect your ability Help to Buy Slough to borrow funds. My company has helped many property developers start their careers by setting them on the right path from the very beginning, and helping them to become great.

Risk 2 - Borrowing Risks and Interest Rate Risks

When you borrow funds, you need to be aware of the possibility of interest rates rising during the term of your development or long-term holding of your investment. This can create higher development and holding costs. However, this need not be of concern as the actual increase may not be too high. Of course, on the other end of the scale, you could also increase your profit if interest rates go down.

Risk 3 - Market Value Risks

Based on the fact that property values can fall as well as rise, you can have no guarantee of the value of your project on completion, or even how much demand there will be should you decide to sell. Smaller, quicker, turnarounds will be less risky and there will be less time for values to fall. But on the whole property values rise more often than they go down and in the long term if you are holding on to some of your properties, you will make money. Property values would need to drop by about 15% before you would tend to lose money.

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