The £20k Cost No Property Guru Shows You.
Most people who approach property development for the first time are taught to focus on the headline numbers. The land cost, the build cost, the end value. Nice and neat, simple on paper. But the reality of development isn’t simple — and if you go into a project looking only at the headline numbers, you will almost certainly lose money.
I see this time and again: an over-simplified model of development that works well for selling training courses, but not for building a sustainable business. You’ve probably heard the guru maths. “Surely you can build a house for £250,000.” And in isolation, yes, of course you can. That’s not the point. The real question is: what’s the true all-in cost of getting from start to finish, and does the margin stack?
That’s what matters.
So let’s pull back the curtain and talk through what the numbers actually look like on a real project. I’ll use my current Chester commercial conversion as an example.
The £19,300 Before We Even Started
We’ve just finished our application for development finance on a £350,000 loan. Before a single brick was laid, here’s what we paid:
Broker application fee: £1,500 + VAT
Broker success fee: 1%
Bank valuation fee: £2,500
Bank monitoring QS first survey: £1,250 + VAT
Legal fees: £2,500 + VAT
Total: £19,300.
That’s nearly £20,000 gone before we even had the keys to the site in hand. And it doesn’t include the interest payments, the build itself, or the countless small line items that pile up as a project moves forward.
Most new developers never see this coming. They’ll plan for land, for build, and for sale. But the silent killers are the professional fees, finance costs, surveys, monitoring reports, legal costs, and taxes that chip away at your profit.
And here’s the uncomfortable truth: these aren’t “nice to have” extras. They’re unavoidable. Every lender wants a valuation, every project requires legal work, every deal will have layers of professional oversight. If you don’t factor them in, your deal doesn’t just look a little less rosy — it can completely sink.
Why Appraisal Matters More Than Optimism
Our Chester build is programmed for 20 weeks. On paper, you might budget interest for that same period. But I allowed for 12 months of interest at 10% — about £35,000.
Why would I do that when the programme is less than half that length? Because reality bites. Delays happen. Materials don’t arrive. Contractors get sick. Planning conditions drag. If you build your appraisal assuming everything goes perfectly, you are building on fantasy.
The experienced developer protects against downside, not just optimises for upside. I’d rather over-allow and come out ahead than cut corners on the appraisal and find myself scrambling later.
This is the heart of development: discipline in the numbers. You don’t win because you found the cheapest plasterboard or squeezed your architect down on fees. You win because your appraisal was honest, conservative, and resilient enough to survive the shocks.
Why Guru Maths Doesn’t Work in the Real World
Let’s return to the classic fanboy line: “Of course you can build a three-bed house for £250,000.”
Yes, you can. But the cost-to-build is only one part of the story. Development is never just “bricks and mortar.”
Here’s the better set of questions:
What size is it?
What spec is it?
What are the other costs?
What’s it worth afterwards?
And does the margin stack?
Because once you factor in everything beyond the basic build, the picture changes dramatically.
Development is build cost plus:
Finance
Professional fees
Surveys
Community Infrastructure Levy (CIL) or Section 106 obligations
Land purchase costs
Stamp duty
Contingencies
Every single one of these pieces is measured in pounds per square foot. And unless you know your all-in cost per square foot and compare it against your end value per square foot, you’re not doing development. You’re just dabbling.
An Intellectual Discipline, Not a Sales Pitch
What frustrates me about the oversimplified, sales-driven approach to property is that it undermines the intellectual discipline required for this business. Development isn’t about buzzwords, shortcuts, or parroting the cheapest possible build cost in a YouTube comments section.
It’s about:
Understanding risk.
Stress-testing your assumptions.
Knowing where your margin will get eaten away.
Recognising that finance is often more expensive than you expect.
Anticipating delays, cost creep, and lender requirements.
When you look at development properly, it stops being a game of “can I build it cheap enough?” and becomes a deeper question: “Does this scheme stack up when you model it against the real world, not the ideal world?”
That’s why I’m documenting the Chester project in full: the good, the bad, the ugly. Not just the neat success story at the end, but the actual journey — fees, delays, hidden costs, and all. Because that’s the only way to truly understand development.
The Danger of Simplistic Narratives
Property is an attractive industry because, on the surface, it looks simple. Buy land, build houses, sell them for a profit. But complexity is where the margins are lost or won.
The simplistic narratives — “build for £250k,” “borrow cheap money,” “double your money in 12 months” — are appealing because they’re easy to digest. They make the industry sound like a quick game anyone can play. But they are also dangerous, because they blind you to the subtleties that actually determine success.
If you’ve ever wondered why so many new developers burn out after one or two projects, this is usually the reason. They bought into the simple version of the story and didn’t prepare for the real one.
Case Study: Chester in Context
To bring this back to reality, let’s consider the Chester commercial conversion. On paper, it looks like a straightforward project: convert a property, add value, refinance or sell. But when you build in the real numbers, the story shifts.
The upfront fees alone were nearly £20,000. Add in interest of £35,000 if the project drags. Add contingency. Add monitoring fees that will recur throughout the project. Add the opportunity cost of tying up capital. Suddenly, what looked like a “cheap” project has significant overheads before you even begin.
But because we modelled all of this in advance, we’re not blindsided. We know the deal still stacks. That’s the difference between wishful thinking and disciplined appraisal.
The Real Skill of Development
So what’s the real skill in development? It’s not negotiating your builder down by 5%. It’s not even spotting an undervalued piece of land (although that helps).
The real skill is knowing your numbers with ruthless honesty. It’s being able to look at a project, build out every single line item of cost, stress-test the timeline, and still see whether it makes sense.
When you do this, development shifts from speculation to strategy. And once you operate at that level, you can withstand market changes, interest rate hikes, material shortages, and all the other surprises that are part and parcel of the industry.
Why I Share the Ugly Numbers
The reason I share numbers like the £19,300 in upfront fees is simple: too few people do. It doesn’t make for an attractive sales pitch. Nobody buys a course when the first slide says, “Here’s how you’ll spend £20,000 before you lay a brick.”
But if you’re serious about building a career in development, this is exactly the reality you need to understand. Development is capital-intensive. It requires resilience, patience, and strong financial controls. The glossy version may sell training, but it won’t help you survive your first real project.
Final Thoughts
Yes, you can build a three-bed house for £250,000. But if you don’t know the all-in cost per square foot, and what you can sell it for per square foot, you’re not doing development. You’re just playing at it.
The truth is that development is as much about managing finance, fees, and risk as it is about laying bricks. It’s about preparing for the £20,000 costs no guru talks about. It’s about assuming delays and over-budgeting for interest. It’s about building resilience into your numbers so that when reality bites — and it always does — your deal still stands.
That’s the discipline. That’s the difference. And that’s why I’ll keep documenting the Chester project, warts and all. Because the industry doesn’t need more fairy tales. It needs real numbers.
And if you want a deeper dive into how to find Property Unicorns in today’s market, grab a free copy of my book