Research from Sourced Franchise, the UK’s leading property investment platform, reveals that starting your own property development business costs upwards of £50,000 just to get off the ground, and well over £100,000 during the first year of operation.
But do amateur investors really need this much cash to get started, or could there be a more affordable, more accessible way in?
Property is one of the most popular and profitable investment assets in the world, and rarely are the returns greater than those generated through property development. For the amateur investor, however, development can be a difficult and daunting profession to get into.
Research by Sourced Franchise shows that it costs an estimated average of £50,000 just to establish a new property investment business, money which is needed to cover the likes of marketing, branding, building a website, training and education, and, of course, initial investment capital to get the first projects underway.
The time and cost that comes with creating a new business of any kind is impossible to ignore. Even the supposedly simple process of choosing company branding can take weeks to complete.
And while the up front cost of all of this is probably the thing that prevents most people from taking the plunge, there are also the ongoing costs of running a business to consider.
From generating property and investor leads to paying for an CRM system and providing training and personal development courses for yourself (or your team), you’re looking at average monthly running costs of an estimated £5,100, or £61,200 over the course of a year. Add this to the setup costs, and the outlay during the first year of operation could be upwards of a staggering £110,000.
Is there another way?
Anyone who is hoping to get involved in the property sector but has just been put off by the high costs of doing so will be interested to know that there is another way.
Property investment and development franchises are helping investors, from first-timers to weathered professionals, bypass these high initial costs.
A property franchise enables you to invest your money into investment, transactional, or development projects – while benefiting from an established brand and business model, plus all important expertise.
This means you don’t have to go it alone and, as such, the costs of setting up and running your business are much lower.
The setup costs of a new franchise can vary (with the Sourced offering from £12,500). The initial investment enables you to become part of an existing, established brand; gain access to exclusive territory; receive training on operation, sourcing, and deal packaging; benefit from great website exposure; as well as receive the full support and guidance of the parent company.
Furthermore, the ongoing benefits of being a franchisee are plentiful. For a monthly cost, around £295 per month in the case of Sourced, franchisees can receive property and investor leads; full support via email, phone, and video; the ongoing benefit of national brand marketing; training events; and legal support. All of these benefits and more are also tailored to suit the specific needs of each franchisee.
And talking of a tailored approach, some property franchises also enable investors to spread their risk across multiple investment avenues. These may include general development deals, property conversions, refurbishments, property sourcing, flips, and more from all corners of the property world, including sales, lettings, student accommodation, and HMOs.
Sourced Franchise Director, Chris Kirkwood said, “Property is a reliable and resilient investment avenue, certainly when measured against the likes of ISAs, stocks and shares, and luxury products. So it’s no surprise that lots of amateur investors – those who have money saved up but no real experience in making it work for them in creative ways – often turn to property for answers.
But the industry is not as easy to access as many people first think, and going it alone, not least when it comes to the world of development, can be expensive and packed full of obstacles.
That’s why development franchises, such as Sourced Franchise, are offering an alternative point of entry for everyday people who are ready to work hard towards making a success of themselves in development.”
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