One look at the papers and you would be led to believe that being a landlord or property developer is the perfect job right now. The news is full of stories about expensive London properties selling for sky-high prices. This isn’t necessarily the case for the rest of the country, though, and sometimes there are properties that are more trouble than they’re worth.
Biting off More than You Can Chew
Buying homes that are in need of major renovation is a risky investment, but, like most risky investments, the payoff can be huge. You can pick up homes that have suffered some serious damage or have been neglected for many years for very low prices. They key word property developers will tell themselves here is “potential.” Given a little TLC, this could be a great home for someone. The problem is renovation projects like this get out of hand and the costs and time investment necessary to complete the project might not look worth it anymore. Unless you have ties to the construction industry professionally, it’s advised not to get involved.
Get out of Jail Card
Of course, this isn’t very good advice if you’re already knees-deep in the project. Redevelopments of this scale can be time-consuming, and your area’s market may have shifted for the worse in this period. If you’ve been questioning whether you can meet your projected targets, you might want to consider selling the property unfinished. Developers, especially those new to the field, are resistant to sell incomplete projects as they feel it’s an admission that they got it wrong. This can be a common naïve viewpoint, however, it’s also a potentially dangerous one.
Early research of the market will enable you to understand that it is ever-changing and very volatile. When put in this situation, many developers seek out specialist companies who operate under a “we buy any house” scheme to get out of trouble. These companies operate on a large scale, which means they’ll have the funds and manpower to finish the job. Specialist companies can offer a cash price on the property in whatever condition.
If you’re sitting on a property that you’re having reservations about, ask yourself if both the time and monetary investment is worth it. Getting out now may allow you to put that money into a safer proposition.