Why smart property developers think about sales before they build anything
Small-scale property development is just one small step up from flips and doer-uppers, and converting a commercial building into residential can produce impressive profits.
Many factors will affect those profits but perhaps the most important is the thought you put into selling your properties at the very start of the process. Read on to find out how smart property developers always think about sales before they build anything.
Who are you selling to?
Seek out insights from local residential estate agents. They are best placed to know how many bedrooms will make your properties most appealing in their area. They will know if you should be appealing to downsizers wanting parking and rooms large enough for their existing furniture, or to families looking for outside space and amenities, or to young professionals preferring restaurants and bars on their doorstep.
Do not make assumptions about who your buyers will be. Check. It’s not enough to just build and hope for the best – if you build for them, then they will come.
If you have a knack for design, you may not need any help, but input from an interior designer at the outset can seriously improve the layout/flow of your floorplans and the decor, which can significantly impact buyer appeal. There is a cost involved, but if you pay attention, you will learn tricks that can be re-used, so the payback from hiring an expert could span numerous projects.
Never, ever forget that you are not going to be living in the flats. Whether it’s splashbacks or downlighters, if anything you put in your flats doesn’t add to your bottom line, they’re a waste of money. But that doesn’t mean everything has to be cheap-as-chips.
For example, avoid low-priced six-panel internal doors and opt for wooden doors with brushed steel fittings and you will boost the visual impact of your properties. Similarly, metal switches and sockets (not white plastic) convey quality. These touches are great investments.
When choosing kitchen appliances, buy entry-level products from premium manufacturers such as Bosch and Neff. Without spending a fortune, you get brand cachet, and your buyers are unlikely to be too worried that the appliances lack all the bells and whistles of the top-end models.
You can make a real difference to bathrooms by using premium accents. Consider putting in LED mirrors, chrome shaver sockets, and good shower fittings. And make sure your tiled splashbacks go right down to the floor. Fit the largest shower cubicle you can (without being ridiculous) – no one likes a tiny shower. It could make a huge difference to a buyer, even if they’ve seen other apartments with larger overall footprints.
Use your head(room)
If you are able to open up an existing roof void, you have a few options. Remember you’re your target buyers may influence which option you choose. Headroom permitting, a small home office could be added.
Or you might opt for adding valuable storage space. Another option is to create vaulted ceilings. These can be particularly effective in a smaller flat since they greatly enhance the perception of space and add character that your competition may lack.
When converting a commercial building, retaining some of its heritage features can add interest and value. The shape of the rooms and the building’s architectural features all add character and opting for a more ‘industrial’ theme with the internal décor can give your flats an added wow factor. Modern flats often have little character and come with modest ceiling heights, making your apartments stand out. But again, remember who you are planning to sell to.
Choosing the right agent to sell your properties isn’t an exact science, but at the very least, make sure the one you pick has sold similar properties in the same area in the recent past.
Your marketing choices can make your agent’s job easier or harder. Off-plan sales can work well for new-build schemes but are best avoided for conversion projects where the host building is currently an eyesore. People won’t be able to see past it.
Show homes are another marketing option, but you need to plan these carefully with your contractor since they will need to finish one flat ahead of all the others, which wouldn’t be their usual approach – consider any extra costs involved. And show flats are of limited use in a conversion project where the flat shapes and sizes are different.
Dressing your units allows customers to visualise living there much more easily. Again, there is extra cost involved – not just for furniture and soft furnishings as you may need to pay someone to dress the units for you. And are your flats being sold fully furnished (for a premium) or will you need to pay for storage after a sale? You also need to be careful not to clutter smaller flats.
Managing the sale and your agent
Give some thought to the agent’s fee structure. You want them to be incentivised to sell quickly without dropping the price every week. A drop in price results in a relatively small difference in their fee, but can really hurt your profits. Consider including a ratchet in the agent’s fee mechanism that rewards them for quick sales at a premium price. And do not try and screw agents down on fees. It’s far better to pay a premium and get their best performance.
Always start with your sales strategy
If you ensure that your sales strategy is part of your thinking from the outset, you should have every chance of securing both a quick sale and a healthy profit.
Read more property development advice
Keen to learn more about property development? We recommend reading these other articles by Ritchie:
- The ‘ugly’ secret to one of the most overlooked (and profitable) property development strategies
- Frequently asked questions about small-scale property development
- Five common mistakes made by small-scale property developers
- Six ways you can make your small-scale property development projects stand out
Ritchie Clapson CEng MIStructE is an established developer, author, industry commentator, and co-founder of leading property development training company propertyCEO. To discover how you can get into property development, visit propertyceo.co.uk.