How Much would it cost to set up a property development business?

A franchise consultancy has calculated how much it costs to start a property development business - and it claims this makes the case for buying into a franchise.

Sourced Franchise claims that starting your own property development business costs an estimated average of £50,000 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. 

It then claims that from generating property and investor leads to paying for a CRM system and providing training and personal development courses means 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 £110,000.                       

It asks - is there another way?

In a statement it says: “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. 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.”

And Sourced Franchise director Chris Kirkwood concludes: “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.”