Property development can be a great way to start building wealth, but it also takes a lot of knowledge and expertise to get it right. You require a clear strategy, a solid understanding of real estate and development markets, and a reliable team to bring your vision to life. In this article, we’ll explore what it takes to complete a successful and profitable property development project.
What is property development?
Property development involves purchasing land or property and increasing its value through renovation or construction. Most residential property development involves purchasing a plot of land, building on it, and selling the property (or properties) for a profit. You can choose to build any type of property the council allows, including:
- Houses
- Units
- Townhouses
- Apartments
- Villas
Property developers sometimes build a home or multiple homes with a plan to rent them out for long-term profits. There is no right or wrong way to go. It just really depends on your own financial goals and wealth-creation strategies.
Naturally, all property developers take a different approach. Some are quite hands-on, tackling a lot of the work themselves and hiring trades professionals for the parts they’re not licensed to do. But others prefer to leave everything in the hands of an experienced team, from land acquisition and feasibility studies to construction. Again, there’s no rule around which process is better, as it all depends on the property developer’s circumstances.
How to become a property developer
Before you decide to get heavily involved in property development, it’s important to do your research. As we mentioned before, if you’ve got the money to spend, hiring a professional property development team removes a lot of the risk. But you still need a solid understanding of real estate markets, property trends, financing, and property laws.
In addition, if you want to go it alone, you’ll need to have exceptional project management skills. To get started in property development, you need some financial capital and a clear strategy to ensure your project is profitable.
3 tips on how to become a successful property developer
It’s fair to say that anybody with the financial means can become a property developer. But there are significant risks of losing money if you don’t know what you’re doing. Here are 3 tips on how to become a successful property developer.
Understand your market
The success of your project comes down to whether you can sell your new property for more than you’ve spent building it. Property development is extremely complex, but this simple metric is all you need to worry about overall. Your best chance of success is understanding your target audience and building with them in mind. You’ll need solid information on housing trends and the local realestate market, so make sure you research and move forward with a clear plan.
Risk management
Whenever you invest large amounts of money into something, there’s an inherent risk involved. Further complicating things is the fact that building properties takes many hands. Think about all the different people and processes involved in building a home. Finance, land acquisition, real estate agents, builders, plumbers, electricians, landscapers, and council approvals. The list is endless, and the fact is something can go wrong with all of these aspects.
Careful planning helps mitigate risk, but risk management is even easier with experienced builders because they already know and can anticipate risks.
Work with experienced builders in Brisbane
Undoubtedly, the building is the biggest part of any property development project. It’s certainly the most expensive part and the part where the most things can go wrong. Having a team of reliable builders that you trust is essential to your success. If you can find builders for experienced developers, they will already understand the development process and be invaluable on your journey.
What things to consider before you start your property development in Brisbane
Getting caught up in all the little details when considering property development is easy, but hiring the best project manager takes care of the small things. But here are 4 crucial considerations you should settle on before you start.
- Location: The old saying, ‘location, location, location’ is always true in property development. That doesn’t mean you have to build in the most prestigious suburb. It simply means you need a location that matches your financial goals. It’s not about the total sale price of a property, but rather your Return on Investment (ROI). Remember, profit percentages don’t care about postcodes.
- Financial feasibility:You need to very carefully analyse the financial viability of your project. Consider all of the costs, potential returns, and the overall economic climate. Local real estate market data is useful in this context. But you also need to have a minimum sale amount in mind – one that ensures you make a profit. When it comes to house prices, you need to financially cover yourself for the worst-case scenario.
- Regulatory compliance:Imagine doing all of the groundwork and planning for property development, only to find the council won’t approve your plans. This could put a nail in your project before you even break ground, so make every effort to understand local zoning laws and building regulations first.
- Market needs:In this sense, property development is no different than any other business venture. If the public doesn’t want your product, it’s going to be a lot harder to sell. With clever planning, you can tailor your development to suit the specific needs of your target market. For example, don’t build a mansion in the worst street of the worst suburb, as people who can afford it aren’t likely to want to live there. Always build for your market.
Property Development Brisbane
Property development can be an excellent way to generate wealth when done correctly with the right planning and support. That said, it requires significant planning, experience and knowledge to maximise your profitability. That’s exactly where Groove Properties comes in.
We’re experienced builders, but we also work in property development ourselves. Thanks to our expertise, risk management strategies, and strong understanding of the real estate market, we have a solid foundation to assist fellow property developers.
Groove Properties offers a complete end-to-end solution for all real estate and development projects. Working in sought-after locations such as Norman Park, Carina, Stones Corner and surrounding areas, we can help make your next residential property development project a success.
