How to determine your profit when developing
When undertaking a development project, it's important to understand how much money it's going to make and the factors that can impact its profitability.
Blogger: Darren Standish, Property Prosperity
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To determine the future value that results from developing your property you may have to consider various alternatives to take into account what may or may not be approved by council.
By including various alternatives in your calculations it may highlight the most profitable outcome and guide you towards the outcome that should be sought when making applications to the council.
When determining what alternatives to consider it may be useful to make a brief inquiry to your local council to discuss what alternatives may be available on your site. However it is important to remember that this may only be a guide so other alternatives may also be available.
Examples may include subdividing 1 block into 2, 1 block into 3, etc. However consideration must also be given as to what type of houses may be able to built on these blocks. Obviously as the subdivided blocks become smaller the size of the houses which can be built also becomes smaller.
It may be useful to discuss with your local real estate agent what properties are most desirable in your area and then aim to meet the requirements of the market. Area demographics may also be available which provide further information as to the average size of households, the percentage of homeowners Vs renters, the age and sex of the occupants as well as their average incomes.
This information can then be used to determine which house would suit the largest number of potential purchasers in the area. Obviously the greater the number of people your property appeals to the more likely you are to ensure a quick sale and maximise the return on your investment.
It is important when considering the future value of your development that you both consider the value of a newly completed home as well as the value of just the land on its own. This will give you options as to whether you build the house and sell it complete or whether you just sell the land off on its own.
About Darren Standish
Darren Standish established Property Prosperity in 2004 initially as a property development company, however after repeated requests for assistance the business evolved into a development consulting business.
Property Prosperity was initially focused on assisting clients with subdivisions and negotiating with councils to ensure that clients maximized their return on investment. Over the years additional services were gradually added to ensure the development process was as seamless as possible for its clients. We expanded into offering individually tailored finance solutions and then added Property Development Analysis, Property Sales and a Builder Broker Services.
Darren is the overachiever of the team and has more qualifications than your average university graduate. As well as completing a Bachelor in Economics, Bachelor in Commerce and post graduate in Accounting he subsequently went on to complete a Diploma in Financial Service, Diploma in Real Estate and Certificate IV in Building. He is a qualified Certified Practicing Accountant (CPA), a licensed Real Estate Agent, licensed Mortgage Broker and holds a Builders License.
