property development

Hi Charlie,

Here’s an extract of a document off our website about Property Development:

What is Property Development?
There are two major categories of Property Development
Land development
Building development
What does a Developer do?
A Developer will typically acquire raw land and apply to subdivide it into smaller lots. The Developer will also improve the land by adding value through infrastructure, such as roads and a sewer.

Once the subdivision has been approved and the infrastructure is in place, the land can be sold off individually or in bulk for “house and land packages”, usually at a significant profit. Alternatively, the Developer can keep the land and construct dwellings on it. The finished buildings can then be sold and the profits may be used to fund the next project. Some Developers choose to hold onto some or all of the properties and keep them as investments for rental properties.

In addition to domestic developers, there are developers who specialise in other areas, for example, commercial property or retirement housing.

Essential requirements of a successful Developer
Successful developers rely on good, careful, accurate planning at all stages of development. They recognise that “time is money” and depend on a good “team” of contractors to complete each stage of the development process.
Without a reliable team, specific tasks can run way over time and disrupt the whole schedule, which in turn eats into those vital profits. Developing can therefore be a highly stressful experience.

In addition to good tradesmen, developers also need the services of expert professionals to ensure the smooth running of projects. Services you may need to call upon include a Town Planner, Engineer, Architect, Surveyor and Solicitor.

Property Development is a bit like baking a cake. All the ingredients must be available, assembled and skilfully combined to get the perfect – or this case the most successful and profitable – outcome.

To maximise profits, developers should buy real estate at “wholesale” prices, as opposed to paying retail. Developers recognise that a large portion of profits are made through buying at the right price and not just through developing alone. This requires good negotiating skills and a firm resolve to walk away when the asking price is too high – without getting emotionally involved.

Downsides of Property Development
The majority of building developments require considerable sums of money and carry a certain degree of financial risk. Downturns in the property market can result in lower than expected land and property values, which may also take far longer to sell than initially expected. Holding property for long periods means increased interest and other costs, which can blow out if interest rates also rise.

As well as these risks, there are also the day-to-day pressures and frustrations involved with developing, such as unreliable tradespeople or professionals, bad weather or delays in the Council process and other “red tape”.
Although many developers are extremely successful in what they do, and earn a good living, it is important to realise that their job is far from easy.

Basic Step-by-Step Process
1. Decide on the type of development (eg house, duplex, townhouse, apartment, retirement property, student accommodation etc)
2. Conduct a preliminary Feasibility Study
3. Find and acquire land
4. Plan the development and estimate costs
5. Approach financier for funding, if required
6. Apply for approvals
7. Build infrastructure
8. Sell land if that is the intention or develop further
9. Prepare technical design and drawings
10. Work on marketing campaign
11. Obtain quotes and building contracts
12. Commence construction and manage the process
13. Obtain necessary certification and approvals
14. Complete the settlement of properties sold and/or manage tenants.

What should I look for when selecting a development site?
For further information regarding land features, read our article on Subdividing which covers issues to consider when sourcing a block of land to be used for development.

Perhaps you could also try contacting Michael Yardney who’s a Property Developer in Melbourne (and also a forum member)

http://www.propertydivas.com.au/7ProfServ/Professionals.aspx?cmaid=7ae2290a-4559-4835-acae-a38a36035ad0&cmstat=Profall

AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources

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