Top 3 tips to enjoy property development

Only a year after she bought her first property in Potts Point, she went to Brisbane and bought another asset in Spring Hill for only $97,000, putting up the rent at $170 a week

“Straight away, it made sense and I just didn't stop from there,” she highlighted.

She then invested in Elizabeth Bay, Eagleby, Darlinghurst, Camira, Adelaide, Melbourne, Chippendale and Annandale.

After going through multiple strategies, including buy-and-hold and renovate-and-flip, Ms Morgan decided to try her hand at property development.

According to her: “I'm just very fortunate to be good at being able to add value to property, whether it's a cosmetic renovation or an extension or even building something from scratch … to make good money from doing something that really excites me.”

“I love seeing something from scratch, from nothing all the way through to completion. That motivates me. It makes me feel really productive, like I'm creating something,” the investor added.

Over time, she has already gone through a couple of projects, including duplexes in Leichhardt and Dulwich Hill. However, she does not hold on to them.

Instead, she buys development sites, builds assets and sells them and then uses the profit to add value to the nine properties in her portfolio.

She said: “The development sites are there to generate ongoing income and sort of snowball, hopefully, into bigger and bigger projects.”

Development tips

As she makes her way towards achieving her goals, Ms Morgan is well aware of the risks associated with her new wealth-creation strategy.

She shares some of her simple and practical tips to overcome these risks and enjoy the process of property development:

Balance optimism with realism

As simple as it sounds, optimism has helped the investor get through some of the toughest challenges in her investment journey. However, at some point, it has also negatively impacted her decision-making.

She shared: “I bought a site quite a few years ago, and I was too optimistic [about] it, and we actually lost money on it.”

Fortunately, her husband now balances her optimism with a little more realism and practicality.

Her advice to investors looking to develop properties like her: “Try to do the numbers based on an optimistic view and a more pessimistic view as well so that you get a well-rounded set of figures for how the development could turn out.”

“Plan for the worst, hope for the best … Make sure the numbers stack up and you know how it’s going to pan out,” she highlighted.

At the end of the day, managing risks comes down to simply understanding where they lie, the investor said.

Engage the right professionals

As she's very much aware of the risks involved, Ms Morgan stressed the importance of seeking help and assistance from experts.

Unlike purchasing established properties, property development entails more complicated processes—from finding good sites and building high-quality structures to advertising and marketing the finished product.

Patience and resiliency have helped her get through her projects, but ultimately, without the help of professionals, it would be harder to even start the venture. Her relationships with these professionals have made the processes more seamless and even opened up more opportunities for her as an investor.

Ms Morgan said: “Just be resilient. Keep looking. Try and build some relationships with agents in the area, and things will pop up here and there.”

Moreover, these professionals ended up teaching her some of the most important investment lessons throughout her journey. She advised investors to take their time when finding professionals to work with and, before ultimately getting anyone on board, make it clear to them what you want to achieve.

At the end of the day, your development team can spell the difference between success and failure.

“This is one of the secrets—find good tradespeople and good partners when you're developing and use a lot of de-risking,” the investor said.

Learn to negotiate

Lastly, Ms Morgan highlighted the importance of negotiation, which is arguably one of the best ways to manage risks.

By negotiating well, you determine a ‘middle ground’ for all parties involved—a vital part of practically any successful transaction.

As a developer who oversees every step of the process, from building to selling, and works with multiple people, from builders and agents to fellow investors, she understands the value of arriving at an agreement where everyone is happy with the outcome at the end of the day.

She said: “I have a real passion about finding a sort of win-win solution and understanding the other side.”

“Understand the other side and what they want out of a negotiation. Try to come to an outcome where everyone is happy and they walk away feeling like it's a positive outcome,” Ms Morgan concluded.

Tune in to Melissa Morgan’s episode on The Smart Property Investment Show to know more about her property development strategy.