Do your research to determine your budget
So many of us dream about making big money in buying and selling property, and property development can be a faster way to make money in property.
While it is a big risk there can also be a big reward – however you need the help of real and experienced experts to deal with council regulations, finance arrangements and the construction process.
One of the first steps in the process is to target a location for your development, which will largely be determined by your budget. You may already hold the property you wish to develop, either as an investment, an inheritance or even the family home.
Targeting growth areas will generally result in the best return, as property values and rents go up as areas become more desirable, increasing your profit.
What kinds of developments are best for first-timers?
The biggest barrier to becoming a property developer is the large amount of capital required to get started, meaning keeping costs low is desirable for first-timers.
Building a second property on a block and selling both is one way to start. You can then sell the front and back properties. You may also be able to rent out the existing property while you build.
Building on vacant land
Building a two houses or townhouses on affordable land in also a good strategy for first-timers, but you will need to manage your cash flow well to ensure you have sufficient cash flow during the building process without income from the property.
Is property development worth it?
It’s important to completely understand all the costs involved – some lenders are reluctant to lend on potential development sites and this could increase your costs of funds. Make sure you understand what the builder, town planner and draftsperson or architect will be doing for you and what the other costs you may incur during the build and when you are preparing for a subdivision.
We have an online course that offers expert assistance to get you started with interviews with real property developers and experts to help you plan your own project.