Becoming a residential property developer as a side hustle can be a shortcut to generate some serious wealth. If you get the right help. It can set you up in life so that you have more time to enjoy the things that matter to you.
Yet it is also a high-risk game, which if not properly project managed every step of the way can result in losses that can very seriously impact your bottom line.
That’s why here at Little Fish we recommend using a property development management company to project manage the development process for you.
Of course, if you want to go it alone you can, but you need to have done your homework and be on top of every little piece of the project to avoid delays, cost blowouts and other issues that can pop up.
So if you’d rather avoid risk and increase the chance of maximising the value of your land you should use a dedicated property development project manager like Little Fish.
It’s also worth noting that not all property development companies are equally matched.
Some will happily take your hard-earned money without a guarantee of return.
Or some will use sub-par builders who will cut corners to save a buck and leave you with dodgy properties that might not pass inspection.
It’s important that you do your research on the company you choose and ensure they have the necessary experience in managing residential property development projects.
A Word on Builders
Many people think that a building company can provide everything needed to successfully develop residential property.
This is a mistake – builders can build great dwellings but they aren’t property development specialists. Of course, they will tell you they can pull it off because this means they will appoint themselves or a subsidiary company as the builder for the project.
There will be no one keeping them accountable on price, time or quality.
Get the Right People in the Right Positions.
It is critical to the outcome of your project that you appoint the right people to the right roles. You don’t need to know how to do it all yourself.
The key is to assemble a killer project team.
All the players have the right experience and knowledge in the right areas. And the most important player on the team is the property development management company.
There are heaps of companies popping up offering development management services. But not all of them have the resources and experience needed, so always be careful picking who will help you with your project.
Below we list the five reasons you should use a project management company.
1. Time is of the Essence
The right company should be able to complete a project much faster than if you manage it yourself.
A good company has the networks to leverage and resources in place.
Experienced professionals also have established relationships to draw on and they should know timelines.
They also live and breathe the project as it goes along.
And finally, they have a vested relationship with the landowners and investors. If they fail their business fails because the client’s profits live or die by the success of the project.
A failed project can spell the end of a property development company as well as the client.
On a side note, to learn about property development project management fees click here
2. Increase Profit and Deliver Value for Money
A solid company can see greater returns for clients because they know what they are doing. They also will save you money compared to you managing the project by yourself.
Using Little Fish as an example – our ongoing relationships with suppliers means we pay below wholesale rates. We then pass these savings on to our clients.
The build alone can be in excess of $100, 000 depending on the project. So a development management company like Little Fish will pay for itself several times over in cost savings.
We can also get the job done faster and cheaper than if you managed it by yourself.
You also get added bonuses like expert advice and leverage with estate agents and conveyancers. We operate in an economy of scale and our clients get those benefits as well.
Here are some property development cost examples which should give you some clarity around what kind of costs are involved in these smaller medium density development projects.
3. Reduce the Risk
A successful residential property development project is one that mitigates risk factors along the way. A great company has the knowledge and experience to do this. They know what resources to draw on at what point in the project.
They can also give you the right advice to minimise the risks involved. This game is a high-risk and high reward undertaking. And companies like Little Fish have made and learned from mistakes along the way – it’s part of the journey.
Using a company to manage your project means you benefit from that learned experience. And the experience is critical to a successful project.
What seems like small things and have a huge impact on your bottom line. You don’t know what you don’t know.
Avoid playing with fire by thinking that you can learn on the go. This is an unnecessary risk that will end in tears and empty bank accounts.
4. Leveraging Brand Recognition
Doing a one-off residential property development and trying to sell your properties off the plan is risky.
Sometimes a brand behind a project can mean success. Buyers are becoming smarter. Selling off the plan means you’re selling a dream. Or a promise to deliver.
Without a proven track record backing you up it can be tricky. It will also cost you money.
Having your dwellings with a trusted brand behind it is a good move. It will result in dwellings that can ultimately demand a premium. Remember:
How people perceive things determines how they react.
A solid brand is a perception of quality and is guaranteed to add perceived value.
5. Quality Matters
A residential property development project has many moving parts. It’s a bit like spinning plates – there’s a lot to keep in the air at once.
Holding all the relevant parties, suppliers, and contractors to account is a big job. And what you don’t know, you don’t know.
It’s impossible to work in one industry while pretending to be an expert in another. It’s just not possible. Pulling off a residential project takes experience, history in the field and learnings.
Without a finger on the pulse of quality control, you will bite yourself on the bum, guaranteed. You run the risk of losing serious time, money and dealing with migraine level headaches.
As I mentioned above, buyers are savvier than ever. You don’t want to serve up a spoiled product.
You want something that is going to sell off the plan like hotcakes.
Engaging a professional property development management company is a smart move.
That’s why Little Fish is in business.
The smart investors and clients know the right management company can get their projects done. And get them done faster, cheaper and with less risk than if they did it themselves.
So if you have a passion for residential property development it makes sense to let a company like Little Fish run a project or two.
You can follow along and up-skill and learn.
The last thing you want is to get halfway through a project before realising you’re out of your depth.
In life, you need to be able to smell the roses, not outwit yourself. Know when to get out of your own way.
If you’d like to learn more, or you’re thinking of engaging a property development management company, contact us here at Little Fish.
If you considering another development company, then check out these 21 questions to ask them.
Lastly, why not check out our property development consultants service.
We’d be happy to answer any questions you may have. Call 1300 799 277 to find out how you can create your own wealth.