What exactly is a property developer? I quite like this description found on Wikipedia;
“Developers buy land, finance real estate deals, build or have builders build projects, create, imagine, control and orchestrate the process of development from the beginning to end”
I especially like the words ‘create, imagine and orchestrate’ as this is exactly what I do. When I find a development site, I stand on it and spend some time visualising what can work on the land, then I dissect this down by considering several factors including:
The local market demand – what do people want to buy or rent in this area?
Local economics – what is the income of the people living in this area, where do they work, what can they afford? What infrastructure spend is going on right now or planned for the area?
Population growth – what is the growth right now and what is it forecast to grow to?
Budget – how much have we to spend on the development process
Market growth rates – what historically has this suburb been growing at and what are you expecting it to grow at?
End values – what are similar dwellings selling or renting for now?
Choosing the right area in which to develop is crucial. It requires research, research and more research. Most first-time developers can’t afford to develop property in areas such as capital cities where everything- including land, building costs and professional services is more expensive. Instead, I suggest you cut your teeth on an affordable area within a three-hour radius of a capital city.
All these factors result in strong rental and sales demand. Once you’ve settle on a location, search the area for land in close proximity to schools shops and public transport which will attract buyers or renters.
Below are tools to add to your research in finding the perfect location for your development. These include:
Newspapers – local and the big daily newspapers
Property Data sources – where you can purchase specific reports
Property Magazines – Your Investment Property, Your Mortgage, Australian Property Investor, Smart Investor
Budget Reports – look at federal and local government budget and spending reports as this will show you where money is being spent on infrastructure and you will find areas that are pin-pointed for future growth.
Planning Information - from your state planning body and council’s website
Once you have found the area you want to develop in, it then comes down to good site selection. To get ready to assess a site, you will need to:
- have narrowed down your area or suburb where you want to develop;
- completed extensive due diligence on the economic and social factors of the area;
- know whether the suburb has a high rental demand;
- know what the vacancy rate is and what the median sales price is;
- understand council’s Local Environment Plan (LEP) and Development Control Plans (DCPs) so you know what the council will and won’t allow in your area.
It is important you get the initial steps right and go with your head, not your heart, so to avoid making expensive mistakes down the track. Once you feel comfortable with your chosen suburb, the next step is the site selection, which we will delve into next week. Happy location searching!
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“I was bitten by the property bug, there was no turning back.”
Jo Chivers proves that women can indeed have it all- a career that you are passionate about and a family. While all of this sounds great, it does require hard work, dedication, perseverance and a bit of risk-taking.
Jo’s love of property development inspired her to leave her corporate career and pursue her true passion. After educating herself in property investing, she started building up her own property portfolio. After purchasing a few blue chip properties in Sydney, she soon realised how negatively geared they were and began researching outside of Sydney. She discovered a more affordable, large region of NSW where she completed her first property development. Soon her friends were asking her to find them sites and manage their developments.
She realised there was a need for an all encompassing project management service and her business Property Bloom™ was born. Ten years down the track, she has developed over 60 properties for clients, creating literally hundreds of thousands of dollars in equity and high end yields.