Residential Development Process – 6 Simple Stages

Have you ever wondered about the residential development process and what specific stages are involved?

If that’s a big fat yes. Then keep reading, because in this article I’m going to breakdown our own internal six-stage development process that we push our projects through daily – like clockwork.

I’ll share what’s involved to complete each stage and I’ll even sprinkle some tips and advice on the way through. Let’s get into it.

Over several years myself and our team here at Little Fish have broken the residential development process down into six distinct stages.  Over the journey, we’ve populated each stage with every actionable step required to complete that stage.

This allows us to project manage residential property development projects like clockwork and ensure nothing slips through the net. It’s a living breathing process that is always being updated as we learn new things. Yep even we are always learning as regulations and requirements are changing.

It’s this exact six-stage process that significantly mitigates real estate development risk guaranteeing the best outcome is achieved on every project.

Throughout the article, I’ll share with you the six stages in the real estate development process and the various actionable steps required to complete each stage.

Now it’s not practical to go through every actionable step for every stage especially because it’s somewhat of a moving target. But I’ll make sure you know exactly what you need to be thinking about and working on in each stage.

It’s important to note that at any given time in a project we can be working out of two or more stages. We can be finishing a stage off while we’ve already begun working through the next.

The key is to understand the importance of time and efficiency when doing real estate development projects and how these directly impact your projects ROI.

pre-purchase

Stage 1. Pre-Purchase

Now obviously this stage is only applicable if you don’t already own the site you’re planning to develop, and you are looking to purchase one.

This pre-purchase stage you could consider our due-diligence stage. It’s all about identifying a site that ticks all of the right boxes.

The question we are trying to answer here is if the project is commercially viable or not. Just because a site can be developed it doesn’t mean it should be.

 

“Just because a site can be developed it doesn’t mean it should be.”

 

We are looking at the block dimensions, residential zonings, encumbrances, overlays, caveats, services such as power and water. If the site has a notable gradient that needs consideration. And off course the site’s orientation which can be critical when it comes to what can be achieved.

In this pre-purchase stage, we are drilling right down into the numbers. Looking at all the relevant costs and getting a clear understanding of what the potential sales might look like. Leveraging comparable sales and based on what we believe we will be able to achieve on a particular site.

The number of feasibilities we do and subsequently sites we discard in this pre-purchase stage can be insane. Identifying the right site to develop is, without doubt, the first and most important step. You need to get this right otherwise everything you do that follows will all be for nothing.

residential development process settlement

Stage 2. Settlement & Pre-Planning

So, we’ve secured the site. We’re in the agreed settlement period and it’s game on. Every day is a prisoner so it’s time to get to work.

The key activities in this settlement and pre-planning stage include engaging a land surveyor to complete the surveys. Engage an architect or draftsman to begin working on the preliminary drawings and town planning submission and work with a broker to get the required finance approvals ready for settlement.

Side note: if you are looking for information on property development finance in Melbourne we have got you covered.

One of the keys in this stage it to already know what you want to build so you can provide detailed and clear instructions for your architect. This way they can get your plans done and into council in the minimum amount of time.

The dream scenario is when you can achieve your town planning approval before you take ownership of the property. Believe it or not this is very much possible with the right processes in place.

demolition

Stage 3. Town Planning & Demolition

After you have submitted your drawings and town planning report to council you can expect a bit of a wait. Eventually, you’ll receive a request for further information.

The second you receive this you need to start compiling the requested information, make the required changes and get it back to council as soon as practically possible.

Other things you need to consider in this stage of the residential development process include the gas and power abolishment’s, securing the relevant permits, running the demolition tender process and managing the demolition works.

One thing you need to take into account though is checking with your lender that it’s ok to demolish the property at this stage. Some lenders like you to keep the asset standing until right before you want to start construction.

Side note – learn more about subdividing property in Melbourne and strata subdivision with regards to dual occupancy development projects.

residential development process documentation

Stage 4. Construction Documentation

This stage in the development process is critical to the success of your project and your ability to maximise your return on investment. Getting your construction documentation bulletproof at Little Fish is non-negotiable. It will go a long way to avoid delays and hidden costs rearing their head once construction is underway

Having your construction documentation in order is also critical to the construction tender process. It ensures your selected townhouse builders are pricing apples with apples. Again avoiding hidden costs and surprises once construction is underway.

Some of the things you need to consider when pulling together your construction documentation and tender package include interior design, buildability and value management of the project.

Your tender package might include your working drawings, engineering, energy, civil plans, landscaping plans, any soil test that have been completed, the computations, your proposed plan of subdivision and the fixtures, fittings and finishes specifications.

I also should note that this same construction documentation package will also form part of your building permit application. Remember though, what I am sharing here is just a guide. You need to do your own research in your local area. My goal is to simply get you heading in the right direction.

Side note: Learn more about risk management in property development

construction

Stage 5. Construction

You’d be forgiven if you thought this stage in the process was just the construction of the development but that’s not the case. In this stage we are running the tender process where we put the build-out to a handful of the builders we believe are best suited for the project.

Assuming a builder you know or one that has been recommended to you is the right builder is a mistake. With the potential to become a huge mistake. Every development is going to be different and has countless factors that need to be considered. So it needs to be horses for courses when running the tender process and selecting a townhouse builder.

It’s also important you don’t look for the cheapest builder. Your goal should be to figure out what the market value of the build is and then sign up the best builder you can at that level or as close to as possible.

Things you need to consider in the construction stage of the residential development process include the contract type you’re going to enter into, the liquidated damages you can get your builder to commit to.

You’ll need to get your building permit locked away.  You’ll need to think about your street-side service such as applying for your PIC number. And once your construction is underway you need to be managing the plan of subdivision process.

And of course, you’ll need to support your builder any way you can throughout the entire duration of the build. Working with them to arrange all the required connections and services.

residential development process sales

Stage 6. Sales & Marketing

Actionable steps in this stage can be completed much earlier on in the development process. So this sales and marketing stage you can chip away at during the months prior when you have spare time so it’s less of a mountain when this stage finally arrives.

Our goal here at Little Fish more often than not is to sell our properties off the plan. As such we acquire all the relevant assets to help them fly off the shelf.

The things you need to be thinking about in this stage include 3D renders, marketing collateral such as brochures and flyers, inclusions documentation and mood boards and trays.

The number one take away from this stage is to not skimp on the marketing assets and collateral. Awesome assets and collateral equal an awesome sales proposition.

How people perceive things determines how they react to them. This is your chance to position your residential development project as the kick-arse development that it no doubt is.

 

“How people perceive things determines how they react to them.”

 

That’s it, those are the six residential development process stages we at Little Fish leverage to deliver successful development projects for ourselves and our clients on the daily.

Remember the key to becoming a successful real estate developer is surrounding yourself with the right people to ensure you have the knowledge and understanding to make educated decisions every step of the way. Even little decisions that at the time seem insignificant can have a huge impact on your bottom line. Both good and bad.

peter kelly

To put it mildly, Peter Kelly is enthusiastic about real estate. When he’s not looking at properties, or visiting potential sites, Peter can be found online at realestate. com. For him, it’s more than a job – it’s an obsession. Peter is a co-founder here at Little Fish Property developments.