How to Calculate the Profit of Your Property Development

Entering the world of property development can be a lucrative decision, but the costs of your projects can soon add up. It is important to consider each stage of your development in advance, to ensure that your project is a financially worthy venture.

Committing to a property development project with no clear idea of your end profit can be rather risky. You may be able to buy a property or plot of land for a relatively low price, but the subsequent costs may cause your project to financially escalate beyond your means. Therefore, taking time to calculate your expected expenditure will help you gauge whether a project makes financial sense.

The Three Main Costs to Remember

As well as the upfront cost to purchase the property or land, you will need to factor in additional costs. For example:

• Professional fees (such as those relating to architects, structural engineers, and planning consultants)
• Construction costs (the total cost of both the construction materials and construction labour)
• Fixtures and fittings costs (any finishing touches you add to a property in the form of kitchens, bathrooms, furnishings and decor)

Along the course of your project, you may also encounter complications that result in unexpected costs. Allowing a contingency of 10-15% to your overall budget will provide a buffer for this, enabling you to calculate a clearer estimation of your end profit.

Your Borrowing Method

More than likely you will require funds to supplement your development project. Understanding the finance options open to you is essential. Borrowing from the bank may result in delays and less flexibility, which can be troublesome if you are working to a tight schedule. Development finance gives you access to the required monies – no matter how big or small – almost immediately.

Our development finance offers you flexibility over the release of the monies, so that you can receive the necessary funding in stages throughout your development project. This funding can be used across your whole project, from the initial property or land purchase to the construction or renovation work. You can borrow between £10,000 and £2 million, depending on the scale of your project.

Calculate Your Development Project Profit

You can easily estimate the profit of your development project by entering your details into our easy-to-use calculator. Start your property development project off with clear direction by being aware of the costs involved and by being alert to any potential pitfalls.

For further guidance on flexible borrowing options to help kickstart your property development venture, do not hesitate to contact a member of our team by calling us on 08000 44 84 84, or by emailing enquires@affirmative.co.uk.