At face value, not much has changed. Putting some flats above a shop or converting an old office building into a handful of apartments still sits at the lower end of the development scale. You create more homes than with a flip, but the fundamental principles are the same. There are, however, some key differences, and they’re all linked.
The first is the scale of the profits involved. The average flip produces profits of just under £50k, whereas a small conversion project is likely to net you between £150k and £500k, depending on its size and location. Similarly, the budget for a flip might be several tens of thousands; however, a small conversion project is likely to run to a few hundred thousand – a big step up. The good news for you as the developer is that you can get 100% funding for the development costs through the well-established commercial lending market.
Another critical difference facilitated by this increased budget is the ability to bring in more expertise to help you. You can afford to hire a main contractor to take care of the construction rather than a jobbing builder, usually a much better solution that involves fewer headaches all round. But perhaps the most significant impact on you as a developer is the affordability of a secret weapon that will totally transform your experience. Someone who will allow you to sit back and let them take much of the strain by overseeing your project for you. I’m talking, of course, about your trusty Project Manager.