real estate development business model

Did you know that the residential property market is worth trillions of dollars, in Australia alone? That’s a hell of a lot of money. It’s the property market players are the winners!

There’s immense wealth to be made if you know the tricks of the trade. Luckily, at Little Fish Property Developments, we love to share our knowledge so that you come out on top.

In this helpful article, we’re going to take a look at the different types of players in the property game, and how the real estate development business model comes out on top of all of them.

Before we get too far into the article I wanted to share a small collection of Melbourne’s boutique property developers that are leading the pack.

These are developers that have refined their real estate development business model like no others.

Alright, let’s get into the article.

development business model

Get your 'Townhouse Development Blueprint' Now!

Grab a copy of my exclusive step-by-step blueprint for mastering townhouse development.

Download Your Free Copy Now

The First Tier – Owner-Occupiers

The first tier of player and the most numerous are owner-occupiers. These are singles or couples (or sometimes more!) who purchase a residential property to live in as their primary place of residence. These properties are usually mortgaged with a home loan from a bank or other lender.

These people follow their hearts and choose to live in places where they feel at home or houses close to schools, shops and other local amenities.

Owner-occupiers sometimes pay a bit above market value or bid higher at an auction, because they have their hearts set on a place.

real estate developer business model

The Second Tier – Investors

The next level up is investors. These are either single operators or couples or companies that acquire the property with the prospect of a return. This return is either through rental income or when they sell up when the property rises in value. Although they have profit in mind, some investors make skinny margins or none at all.

This is because new investors often purchase of the plan, from developers, who are trying to maximise their profit margins. Many people get frustrated about this. It can be annoying, which is why it’s better to be the third, final and top tier – a real estate developer.

developer business model

The Third Tier – Real Estate Development Business Model

Finally, there are those players that are at the top of the game, and that’s the residential property developers.

These are individuals, couples or boutique property developers who buy smart. Add value by developing new residences and sell to make a substantial profit. They maximise the value of their land by building multiple dwellings, as many as can be achieved on the site.

Until recent times, the real estate development business model was only carried out by development management companies and the extremely wealthy.

But over the last little while, a new breed has entered the game, and that is armchair developers. These are regular folks who own land that can be successfully developed.

Now you might own land and think to yourself “well if it’s that easy, I can develop my lot and make a fat return”.

Now, this might be the case, but there are a lot of hoops to jump through, paperwork, approvals, plans and various other tasks that are required to pull it off successfully.

Identifying Sites

You also need to be able to identify sites that are ripe for development, and this takes some skill. If you choose the wrong site or get a step wrong, you could find yourself severely out of pocket.

So if you’ve got an appetite to do this yourself, you’re in the right place. At Little Fish, we specialise in two things. One, teaching potential real estate developers everything we know to help them to kick-start their journey.

And tow, providing a tailored fit-for-purpose service for those that don’t have the time, knowledge or skill to do it themselves.

If you’re in the latter camp, we can manage the entire process for you and you can follow along as much, or as little, as you like, all through our custom project portal.

Want to understand time and cost for a real estate development project? Check out this three townhouse case study.

What to do Next?

So if you’re interested but unsure about the process, let Little Fish help you. We can walk you through every step of the process.

Manage all the hard work and help you to maximise your profits. Call 1300 799 277 to find out how we can assist.