What you’ll need to do to start in property development

Posted on April 19th, 2020

In a nutshell, property development is the act of converting land from its current use into a more productive one. For most who are starting out, that’ll mean building residential property on bare land.

It may sound simple but property development is a difficult career path. To get started, you’ll need a big chunk of change, to be obsessed, and to have a massive appetite for risk – because if you get it wrong, you could lose everything.

If I haven’t scared you away yet, here’s you’ll need to know to get into property development.

Become obsessed

You need to know your stuff to succeed as a property developer. That means you’ll need to research the property market, financing, town planning and construction process as well as real estate marketing.

At the start of your development career, you’ll be wearing a lot of hats and you’ll need to learn fast. Obsession is a must. If you don’t have that kind of single-minded determination then property development is not for you.

Create a network of pros

Surround yourself with the right people from the start of your career and you’ll go far. Here are just a few of the experts you’ll need to know.

Accountants to set up the correct ownership structures.
Lawyers for contracts.
Town planners.
A good architect.
A contact at a bank or a mortgage broker to help arrange finance.
Project and development managers.
Building, landscape, electrical and plumbing contractors.
A quantity surveyor.
Marketing specialists.
Salespeople once it’s done.
A mentor. It helps to have someone who’s been there and done that to give you advice when you hit a stumbling block.

You’ll need a team of pros around you to succeed as a property investor.

Get your money right

Generally you need at least 30% of your project’s costs in order to get bank funding. For even the smallest residential development projects, that’s going to be over $200,000-$300,000. The bank will also need to be confident that your project is realistic and that you have the resources and skills to make sure it succeeds.

It’ll help if you have a huge deposit, other valuable assets and a high paying job, but if you don’t have a realistic plan in place, you won’t get far. A good finance strategist is essential to help you develop your application and ensure that you’re approved.

Determine feasibility

Determining whether or not a project is feasible is perhaps the most important part of the entire process. You’ll need to call upon all the experts you have in your team as well as several contractors to make sure you get it right.

During this stage you need to estimate:

What you can build on the property.
How much it will cost.
What restrictions there are on building in the area or on the title (i.e. easements, covenants etc).

It’s easy to underestimate costing at the beginning of a development so ALWAYS leave room for costs to increase, and time for project delays. Getting consents from council is one notoriously costly and difficult roadblock that almost all property developers have been stumped by at one stage.

Property development isn’t easy, and it’s not a get rich quick scheme – in fact, most developers will fail. But if you’re single-minded, do your research, surround yourself with experts and have enough capital behind you, it’s definitely possible.

Shoot me an email if you’d like to chat property development any time.