How do you budget for a property development project? There are a few figures that need to be considered:

• What is the property worth to buy? Consider all the ancillary costs, like legal fees, stamp duty and anything else that goes with purchasing the property.
• What is the development cost going to be? To get a good idea of what the development costs are going to be you’ll need advice from either a builder or surveyor.
• What will the property be worth when you come to sell or rent it? What sort of margin can you pull from it? That will tell you what the profit is that you can reconsider the property.
• The cost of working slowly on the project. Many people who develop properties tend to do the work themselves, but the cost of that is the project can run slower than you anticipated. Not only is your time money, but you are paying the mortgage, any associated loans, and all before you have seen any income from the property at all.

For a rough estimate of your overall costs, you can try using an online home renovations calculator - but remember this is an estimate, and the total cost could be considerably more or less.

We can sometimes get wrapped up in the project ourselves and start to impose our own personal feelings on the property. Buying fittings that perhaps we would like, but we need to remember is that our tastes may not be the customer's too. And if you’re buying fancy light fittings or fancy taps, kitchen fittings or appliances that you might like you may very well be spending money that is unnecessary because whoever buys the property is going to come in and put their own stamp on the property anyway.

Lastly, you need to be aware of accounting for the value of property increasing. The property value could increase or even decrease over time. And while you’re developing your property prices may very well go up, they might slow, or they may very well go down. The last thing you need to do is be stuck with a figure in your mind of what you’re going to realise from the property that isn’t realised. So just account for the value you add to the property. And this of course is more important for you’re using the profits from your development to purchase other properties because you may end up having to buy higher, as well as selling higher.

Finding the right tradespeople for your property development

How to develop a property for the location

Security for an unoccupied property

Home insurance advice for renovations and unoccupied properties

Unoccupied property insurance from Towergate

For more information on the cover Towergate can provide for your unoccupied property, visit our unoccupied home insurance webpage or call one of our specialist advisers on 0344 892 1750.