How to Become a Successful Real Estate Developer – 7 Killer Tips
If you have a long-term goal to generate wealth for yourself and your family. Then you have a few options for how to get there. Providing you have some capital to invest.
You can either invest in the stock market, invest in property or try your hand as a real estate property developer.
The first option is the riskiest. As the stock market is prone to fluctuations and can plummet due to recession and other financial crises.
Investing in property used to be the sure-fire way to generate wealth in Australia. And it’s still a good bet but the third option we think is your best bet – developing real estate.
Becoming a real estate developer is no longer a means of generating wealth that is reserved for the super-rich or wealthy professional property developers.
Mums and dads around Australia are turning their land into a gold mine as they undertake and sell the resulting homes for a tidy sum. So if you’re wondering about how to get started, you’re in the right place.
Now, before we start dropping the knowledge if you’re looking for property developers Melbourne that live and breathe this stuff to help on your next project, hit us up we would love to hear from you.
If you’re looking for information around cost then check out this article.
Alrighty, let’s check out everything you need to know about how to become a property successful real estate developer.
And we’ll bust a few myths along the way.
1. Does Education Matter
We get asked this quite a lot. “Guys, do I need a degree to be successful in this game?”
While those running large development companies, with numerous projects on the burn at once and turnover in the millions might benefit from formal qualifications in finance, business administration or construction management. It’s definitely not a hard requirement to get started in the game.
All it really takes is being able to spot a site that is prime for development, acquiring it and getting started. If you already own land that is suitable, even better. Education is indeed important, but it is possible to educate yourself about the process as you go along.
We’ve seen retired teachers, scientists and accountants successfully develop land.
All of them have taken an open-minded approach and have learnt as they go. So don’t let the lack of a formal qualification put you off trying your hand at becoming a successful real estate developer.
You can’t do it all on your own, the key is to build out your own team of experts.
2. Find Suitable Land
You may already own a block that is suitable for a strata subdivision dual occupancy. Ideally, you want a lot that’s large enough to gain approval from your local council. Check out this article to learn more about subdividing property in Melbourne.
This may vary from state to state so it’s important to either do some thorough research or engage property development consultants to assess your land. Otherwise, you want to keep an eye on the property market for a site that’s ripe for development.
Look for old houses with large front or back yards. Or big corner blocks as these are ideal for a knock-down and development project.
Side note: check out this trusty video where I systematically break down how to identify the perfect dual occupancy development site in Melbourne.
3. Get Finance Approval
Chances are if you’re starting out you won’t have enough capital to fund the project yourself. This means you’ll have to approach a lender. You need to keep a few things in mind while doing this.
First, due to the banking royal commission, lenders are tightening up their processes, so be prepared for a lengthy process.
It may be worth engaging a broker to help you. Be prepared to pay higher interest rates (1-2% more) than a loan on an investment property.
Also, banks will generally lend you 70% of the value of the land and 70% of the construction costs.
That means you need to have a deposit of 30% off the value of the land. And 30% off the construction costs.
This may mean leveraging the family home as equity.
You need to know the real estate development risks involved in this. It can actually be a safeguard to engage a professional property development project manager, which I’ll discuss in the conclusion.
4. Learn the Process
Learning the real estate development process steps will become a critical part of your journey as a successful real estate developer.
After you find your lot you need to hire a land surveyor to do what is called a “re-establishment survey” and a “features and levels survey”. These are essential steps that need to occur before an architect can work on the designs of your development.
Working with your architect is an important process too. You need to give them as much to work with as possible, so let fly with your ideas, examples or inspirations.
But remember to pay attention to the character of the nearby properties as well so you get through the town planning process with ease. And that’s the next step.
With your design and application ready, you need to submit it to the planning department at the local council. There will always be a wait here.
This will vary from municipality to municipality, but they’ll usually get back to you with a “request for further information”. Respond to them with everything they want, and you’ll keep the process happening.
5. Construction Documentation and the Build
Next, you’ll need to get all of your construction documentation done before commencing a build. Once this is done you can get your building tender process underway so you can get your builder locked in and the ultimately the build underway.
Selecting the right builder for your project is going to be critical to its success. We’ve curated a list of some of Melbourne’s finest dual occ builders to give you a head start if you are already up to this part in the process.
The next step is to sell the properties off the plan, to reduce settlement times so you see your money sooner.
6. Keep it Moving
Once you’ve made a profit of your first development, the key is to not stop there but keep an eye out for the next site.
The aim of the game is to begin working on your next development as soon as you’ve finished the first. Or to have multiple sites cranking at once.
It’s at this point your finances are compounding and you are really starting to get somewhere building your wealth and becoming a successful real estate developer.
Here are some more skills we believe are needed for property development success.
Want to Know More?
If you’re keen to learn more about how to become a successful real estate developer or want to explore engaging our development management services to do the hard yards for you, Little First Property Developments are on standby for you.
Call our expert team here at Little Fish on 1300 799 277 for a free, no-obligation initial discussion.
If you’d like to understand the numbers and timing first then check out this real estate development case study we’ve completed on a three townhouse corner site.