Developing property is a rewarding process because it allows you to create new homes, townhouses, or apartments. If you have a creative personality, property development can become very lucrative as you can add your touch to the projects and find your niche market. It can also be financially rewarding, if your project has high demand, you may be able to sell the developed property for a large profit or hold onto them as long-term rentals. However, it is important to note that developing property can also be a complex process, as it involves a number of steps and requires a significant investment of time and money. It is important to carefully research and plan the development, seek legal advice to ensure that you are complying with all council laws and regulations. It is also important to carefully assess the market demand for the property you are developing, as this will impact the success of the project. Despite the challenges, I find the rewards of property development to be worth the effort, as it allows me to be creative and deliver something that has value and can be used by people to benefit their lifestyles.
Here are some key steps that I follow when doing a project:
1. Identify the type of property you want to develop
This could be a large block of land, an existing house or property that you want to renovate or rebuild, or in some cases, this can be a combination of both. As an example, you can buy an older established property, renovate the front house and then subdivide the back to build a new home on.
2. Conduct Due Diligence
Conduct due diligence before you purchase. I always sign a contract subject to a due diligence clause which allows me to research the zoning laws, building codes, and any other regulations that may affect your development. You should also assess the property or land’s location in more detail to populate a development plan and ensure that it is financially feasible in the location you are looking at buying.
3. Create a development plan
As the saying goes, “write a plan or you are planning to fail.” In this stage, some things I include are the type of property, the number of dwellings, the layout, and any features or amenities the project will have. You should also consider what type of buyer you are targeting for the project and the demand for the type of property you will be building to ensure there is a good financial return.
4. Obtain any necessary approvals
This is the harder part. You need to have an architect or draftsman draw your project to ensure it meets the local council’s code and matches your business plan. You then need to obtain the required Civil Engineering works before submitting to council for a permit. Once a permit is achieved, you will need to finalize your building or construction plans.
5. Secure Financing
Depending on the size and scope of your development, you may need to secure funding for a residential loan or commercial loan. This may involve presenting a business plan and financial projections to demonstrate the viability of the project. This is where your development will get valued, and it needs to stack up in the lender’s eyes or they will not fund it.
6. Develop the Property
Doing due diligence on your builder is crucial. Don’t just go for the cheapest price. You want to ensure the project will be managed to a high standard. Your construction team will be on the ground each day and they need to ensure it comes in on budget and within your required timeframe.
7. Market and sell the property
Once the development has started or prior to construction, you will need to market and sell the properties to potential buyers. This may involve working with real estate agents or using other marketing channels to reach potential buyers. Owner occupiers will always pay more for homes then investors. Remember that!
It is important to note that developing property involves a lot of steps and can be complicated. It is important to do your own research before starting any project to arm yourself with the best chance of success.
If you want to learn more about how to get into your first project, feel free to reach out below and we can book in a catch up on the phone.
Disclaimer: The information provided in this article is solely the author’s opinion and not investment advice – it is provided for educational purposes only. By using this, you agree that the information does not constitute any investment or financial instructions. Do conduct your own research and reach out to financial advisors before making any investment decisions.
