7 Critical Property Development Steps You Need to Master to Up Your Real Estate Development Game
Are you interested in learning about the most critical property development steps that are required to complete successful development projects?
There are a few reasons to consider becoming a residential property developer in Melbourne. The potential to generate some serious wealth is up there as the biggest reason.
While there are some risks involved in a venture like this, there are also hefty returns.
Before we get into the seven property development steps let me explain why you should consider property development as a way to grow you wealth in the first place.
Why Consider Property Development?
In days gone past there were limited ways to generate wealth in Australia. Most people invested in property.
That is, they acquired investment properties which they let out. Others turned to the stock market – a risky venture at the best of times.
And only the mega-wealthy would consider investing in property development.
Now, more regular Australians are sitting on a potential gold mine. A large plot of land that is suitable for subdivision.
Ordinary people like you are successfully developing residential property for profit.
There is the potential for some serious earnings here if you know what you’re doing.
For Example …
Say the family home is situated on a large block of land. The home might be in need of some repairs or renovations.
A savvy investor could consider subdividing the land and build two or more dwellings there.
You could then live in one and sell the others. Or you could live in one and rent out the others. Or you could sell them all and then downsize with a tidy sum in the bank.
If this sounds appealing, keep reading.
We’re going to discuss the seven property development steps you need to understand to deliver successful development projects.
1. Acquire Land
As we mentioned above, you might already own a block of land suitable for development. You want a block large enough to subdivide into two or more lots.
It also needs to be appropriately zoned for residential developments. Finally, it needs to be free of major encumbrances.
If you don’t already own a suitable lot, you need to get looking for an appropriate residential site. You’ll need to consider the aforementioned aspects.
Remember, the lot needs to be suitable for subdivision and development. You want to look for a property on a large lot, with an older home on it.
The best properties are with almost dilapidated homes on them. This means you won’t need to compete with new owner-occupiers, who usually want something they can move into.
2 Pre-Purchase Due Diligence
It is worth mentioning that you’ll need to undertake pre-purchase due diligence. You can’t just rush in blind and expect a gold mine.
You need to consider the zoning, the dimensions of the land, the gradient and any encumbrances.
There are heaps of factors to consider. If you don’t have experience in this area then we seriously recommend looking for help.
It doesn’t matter how great you do everything else in the development project – if you purchase a dud site or one with complications, you’re in trouble.
In this game, every factor counts and one mistake can absolutely destroy your chances of a successful project. This is such an important step, so tread lightly and be careful.
The location of the land is also vital. And not just for obvious reasons like proximity to amenities like parks, schools and public transport.
You want to look for undervalued areas where there are large lots available that are ripe for development.
Look for areas where you can see similar developments to the one you’re considering. Precedent will help with the planning process.
3. Design, Town Planning and Related Reports
So you’ve got your land – great! The first step accomplished. The next thing to do is engage a land surveyor to do what is called a re-establishment survey, and a features and levels survey.
This is a necessary step that will have to occur prior to any design/drafting. Anyone starting out in property development needs to do this.
The architect needs as much to work with as possible. Give them ideas and examples, or any inspiration you’ve come across.
Remember to consider the pre-existing character of the suburb as well. This will ensure an easy glide through the town planning process.
Once your design and application are ready, you’ll approach the planning department at the local council. There is always a wait here. This wait time will depend on the council. But they will get back to you, often with a Request for Further Information (RFI).
Get all your ducks in a row and respond. This will ensure a timely project.
In this game, time is money and every day has a dollar value attached. You want to keep the ball rolling constantly and not pause or delay.
4. Get Your Construction Documentation Ready
Are you getting sick of paperwork yet? If so pick another venture, because in this game there is a bunch of red tape to chew through. It’s without a doubt one of the critical property development steps.
Your chosen townhouse builder will need a stack of documents. They need the following to begin work on your project.
We don’t have the space to detail everything here, but this is a handy list you can refer to:
- Working plan set
- Engineering plan set
- Energy plan set
- Energy report
- Civil plans set
- Landscaping plan set
- Soil test
- The proposed plan of subdivision
- Fixtures fittings and finishes specifications
5. The Build
The next step is an exciting one!
Once your plans are approved and your townhouse builder has everything they need, your build will commence.
But there is one very important step that begins in parallel of the build …
6. The Subdivision Process
This is a very important property development step, a step property development beginners often don’t give enough weight.
Once the builders begin work you need to get moving on your Plan of Subdivision (POSD). This is an application that needs approval before you can legally create multiple dwellings on one lot.
Your land surveyor will help with this. They will give you a checklist to complete and all the relevant paperwork to fill out. You need to get this done and dusted before the build is complete.
This is absolutely vital.
All dwellings need to be on their own titles before you can settle any sale of property. If you want your money from a successful subdivision development project, you cannot miss this step.
Side note: in this article, we explain what a dual occupancy subdivision is in case you need some clarity.
7. Selling or Letting
Once the build is complete, your subdivision has gone through you will sit on a potential gold mine. You are then free to put these brand-new dwellings on the market. You can either sell, rent out or both!
You’re spoiled for choice. If you’re new to property development, this is an exciting time.
Here at Little Fish, we prefer to begin the sales process at the beginning of the build. Our goal is to sell the properties off the plan.
We do it this way so clients can settle them with their buyers as soon as the build is finished. This means you see your money sooner.
That said, some development project managers will suggest waiting for the construction to finish, furnish the dwellings and run a standard sales campaign. This way works too. It’s up to you.
Selling off the plan usually means a quicker settlement though.
Want to Know More?
By now you should have a lot more clarity around the critical property development steps that you will need to master to succeed in the property development game.
But should you want to know more from a team of expert development consultants, Little Fish are on standby.
Call 1300 799 277 to find out how we can help you grow your wealth today.