Four simple steps to begin your property development journey
Many people who have found success in property investment are eager to jump into more sophisticated wealth-creation strategies such as property development, but an investor who develops multiple dwellings advises everyone to “start small” in order to learn the ins and outs of the building process.
Like every investment strategy, property development is not a “one size fits all” way to create wealth.
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“[You should] have the skills … [and] the understanding of all the dynamics required to be a good developer [because] it's hard to be a good developer,” Smart Property Investment’s Phil Tarrant said.
While you could have already been successful in building granny flats or duplexes, developing multiple dwellings is a “completely different world”.
Investor Jason Byron shares four easy steps to begin one’s property development journey on the right foot:
1. Change your mindset
You might be comfortable, as a property investor, to purchase multiple properties at once, but it is definitely not advisable for developers to jump into 20 massive projects at a time, especially if they are only starting out on this new venture.
Jason admits that he was personally scared when he first decided to start his transition from being a property investor to a property developer.
He said: “I had to make a big mindset change, but what really worked for me … [and what] I teach friends and people all the time … [is] ‘First off, do something small.’ "
“Just do a build. Don't go and try to do 10 townhouses ... Just do a build [and] learn the … building process—that's a big step,” the investor-turned-developer added.
2. Train yourself in project management
While you can, by all means, get a project manager as being trained in project management can come in handy in your property development journey.
Prior to developing properties, Jason acquired relevant project managing skills while running businesses.
He shared: “It's [going to be filled with] phone calls … My average day, someone rings me up and says, ‘Here's the deal.’ I get the numbers for the deal and I see what it is, do some checks on it.”
“Then I ring my town planner [and] he says, ‘Yes, it's okay.’ Then I ring my architect [and] he says, ‘Yes, I can put this many [dwellings] on it.’ Then I ring the agent [and] say, ‘How many can I put on it?’ So, it's all office work,” Jason added.
3. Build a system
While it may already sound like hard work by now, Jason said that his secret to unfailing enthusiasm for property development is a well-structured system.
According to him, once you have successfully built your own system, everything pretty much falls into place. Otherwise, you’re definitely going to lose money.
Jason said: “Pratt [Plus] makes recycled boxes, right? The boxes are the need. He has a system behind it and the process is taking recyclable stuff and then turning it into something.”
“[It’s the] same with property development, [and] that's what I like about it. You've got a need of people wanting those convenient areas to live in [and] they want to have a nice brand-new product, [so] you've got to work backward from there.
“The people that are successful have a system behind them to follow, and the best thing about a system is [you] can repeat it … Now I work out the land size and I know what can be done on it purely because someone has done it before,” he added.
4. Seek the right professionals
One of the best ways to know if property development is the right path for you is to find reliable professionals who will work to understand your financial circumstance, your goals, your capabilities and limitations in order to lay out the best options for you.
Like many successful property investors, Jason believes that a good financial team is “worth its weight in gold’.
“It's Warren Buffett—what does he say? You know, ‘Price is what you pay. Value is what you get,’ ” he said.
Property development helped Jason realise his full potential as an investor, so no matter how hard it could get, he always tries to encourage his friends and family to get into it as soon as they are personally and financially capable.
According to him: “I had already done five years of investing [when] someone came up to me … and said, ‘What are you doing Jason? You just done a duplex, made $300,000—it worked out perfectly. You have to keep doing this. You've got your system. You've got your structure. Keep going. Go bigger.’ ”
His final advice for property investors looking to try their luck in the development game: Never chase money—go after success instead.
“I really chased success. I've never chased money [because] I just wanted to do the best I can at it … If you do the best you can at it and you educate yourself and you feel like you get to the highest level, then money will come,” Jason concluded.
Tune in to Jason Byron’s episode on The Smart Property Investment Show to find out how his portfolio grew from a countryside home to $20 million development properties and how growth corridors are his chosen path to success.
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