Success in property development, as in all wealth-creation strategies, requires passion and dedication, thorough research, and the help of reliable property professionals. How can investors build their own property development team?
A lot of investors are attracted to the glamour of developing properties, but those who have actually delved into the industry warn that the venture is certainly not for the faint-hearted.
According to host of The Smart Property Investment Show, Phil Tarrant: “It’s not easy. If you want to go into development... go in with your eyes open and expect to go through a pretty serious learning curve.”
Fortunately, there are companies and professionals who specialise in this strategy.
Much like having a financial team for buy and hold or buy and sell, investors can also form a team of professionals to help them do development projects successfully.
“Having a team of people will give me the best chance of acquiring a block of land that I can develop, maximise the assets I can put on that, and have some sort of realistic financial outcome that is beneficial to me,” Mr Tarrant said.
White Gorilla Developments’ Neal Ashworth lists the most important professionals that investors need in their development team:
Before anything else, investors are advised to determine their level of their financial capacity and whether or not it’s sufficient for property development.
Apart from pooling the money needed to buy a house and land, as well as the materials needed and the tradie services required, investors must also consider establishing a long-term financial structure to support their project.
Mr Ashworth said: “That should be in your plan – where can you pull funds from? Then, determine what structure to set it up in, what’s best suited to you and your conditions. Then, you’re all set.”
Financial planners can help establish the right price for securing the block of land, as well as the long-term financial plan that the investor can use to track the growth of the asset.
Once the dollars are secured, the site is determined and an ideal timeline from purchase to build is established, a project manager can help investors stay on track and get more reliable professionals on board.
“I get the consultants on board, including architects, surveyors, and everyone who will take that process through,” according to Mr Ashworth.
Project managers also set up spreadsheets and charts to help investors organise their plans – from your feasibility study to the overall build plan.
Mr Ashworth recommends getting an architect as the investor starts looking for a block to purchase.
It’s important that the architect is familiar with the area so they can help design dwellings that will comply with the policies implemented by the local council.
“I’ll pick the architect saying, ‘I’m thinking of buying this’ and we’ll double-check what you can put on it. He’ll give me a quick once-over of ‘I think you can do this. Here’s your designing tent,’” the property professional said.
“They should know how wide it needs to be, how deep it needs to be, what the height restrictions are, what zoning it is.”
Architects who know people from the council that are involved in the approval of development applications will also be beneficial to the wealth-creation journey.