Have you considered partnering with townhouse developers Melbourne to generate wealth?
In days past many Australians would look to purchasing an existing property to rent out in order to generate passive income.
This can still be worth it, but if you already own or manage to acquire a suitable lot, building two or even three townhomes on it can be a better strategy.
This is because you can sell them all, or sell one and rent out another, or live in one and rent out another and sell the third.
Put simply, you have more options if you partner with townhouse developers to build multiple dwellings, as opposed to buying an existing property.
But choosing the right Melbourne property developer to suit your needs and your project can be tricky.
There will be multiple options, each vying for your business and assuring you they can do the job right.
At Little Fish, we partner with people like you to help them achieve their investment goals. We project manage the development process from start to finish, and you can stay as plugged in as you like.
But we also believe in sharing our knowledge. In this game, knowledge is power but it is also money.
That’s why we’ve put together these nine tips to guarantee that you partner with the right townhouse developers Melbourne.
So if you’re keen to leverage your position to generate some wealth, and want to partner with a developer to do it, read on!
1. Pick a Developer, Not a Builder
This is the first tip because it is uber important. Many builders will claim they can develop land for you.
And while you will need a builder to construct your dwellings, you don’t want them to manage the rest of the process for you.
A builder will say anything and everything to get your business. At the end of the day, they want to make some money, like you and everyone else in this space.
But a builder doesn’t have the detailed knowledge, the industry connections, the networks and the development management skill to manage a residential development project.
This is important to note because when you search the internet for townhouse developers south-east or townhouse development south-east etc. you will hit some builder’s sites.
These are designed to look like they can manage the process for you.
Builders are great at what they do – building homes. This takes a certain skill set and knowledge.
But managing a whole property development, from pre-planning to planning to build to sales takes a different skillset and knowledge base. And boutique property developers do this for a living.
For example, at Little Fish we live and breathe this. It’s our bread and butter. While we work with builders we leave them to do what they do best – build.
2. Fee Structures and Budgets
A developer doesn’t work for free. They will have a free structure they will charge you based on the development and the particulars of the project. This will vary from client to client.
When researching developers you want to get a sense of their fee structure, so you know if it will work for your unique circumstances.
It needs to fit within your budget. Below is a generic fee structure that we use here at Little Fish.
You also need to know how much you can spend. In this game, you can’t afford to be loose with your numbers or go around guesstimating things.
You need to check, double-check and then triple-check your figures.
Your numbers need to be accurate. You won’t get development finance without them. No lender will touch you if you present your figures as a dog’s breakfast.
In this game, every day has a dollar value attached. You need to have a solid budget, that has inbuilt contingencies for when things go wrong.
And remember Murphy’s Law – if things can go wrong they will.
Once you have an understanding of your shortlist’s fee structures, see if it matches your budget.
This will help you narrow down your decision when picking townhouse developers Melbourne to partner with.
It would be work getting some understanding around development agreements as well.
3. Have an Airtight Contract
As part of partnering with a development company, you will have a contract that lists out the terms and conditions of the partnership.
This is a binding legal agreement and will often have clauses that protect both parties.
We’ve seen things go wrong in big ways, and a contract is a part of negating the risk to everyone involved in the development.
Both you and the developer need to be willing to agree to the terms of the contract and to sign it in good faith.
If a developer won’t agree to something being in the contract that you believe should be in there, you must be willing to either negotiate more or walk away.
That’s a good point actually – always be ready to walk away if you don’t like their terms. There are plenty of developers out there who will be happy to take your business.
Make sure that you get independent, professional legal advice regarding your contract. Having your lawyer read over it is a must.
4. Research the Developer
When you begin to narrow down your shortlist of potential townhouse developers in Melbourne, it’s time to do some digging.
In this day and age, a company without an online presence is a major red flag. If you can’t find any Google, Facebook or other reviews on the company, don’t risk it.
A good company will have a solid 4.5 review rating or more. But take the time to read each review.
If there is a negative one, approach them about it.
It may just be a disgruntled client or even someone with a grudge to bear.
Look out for testimonials too. But pay more attention to reviews as testimonials can be faked.
While you’re researching them, also look at their portfolio. Their website should have a gallery of projects.
Look over their portfolio and see if it matches your expectations and inspiration. Compare different developers projects side by side and see which ones you prefer.
It is also worth driving by some finished projects so you can see what they look like in the flesh.
Finally, ask around friends, family and other contacts. You might find that someone you know has an experience with a developer, either positive or negative.
Word of mouth is powerful advertising.
Once you’ve thoroughly researched your potential developers you will be a step closer to making a decision.
5. The Coffee Test and Transparency
Once you have your shortlist, arrange a coffee catch up with each developer.
This meeting is a chance to get to know them a bit more and see if you like their personality and approach.
If you partner with townhouse developers Melbourne, you’ll be working closely with them for several months until the project is complete.
In this time there will be many phone calls, meetings, informal chats and lots of communication.
If you don’t click with them over a coffee, there is a large chance that you won’t click with them during a project.
Spend some time during this meeting to observe them. You can even watch how they treat the wait staff.
This is a great test of character for anyone, not just a developer.
Discuss your vision for the project. See if their vision matches it. If not, do you think you can meet in the middle or negotiate a compromise?
While you’re at this, ask about their processes and procedures. A great developer will be an open book and be completely transparent about their work.
There is no reason why a townhouse development shouldn’t be an open process. If they are cagey or want to hide things from you, pick someone else.
The coffee test should help you separate the wheat from the chaff, so to speak.
6. Enquire About Their Networks
The key to a great developer is their networks.
For example, here at Little Fish, we have an extensive network of builders, suppliers, sales agents, conveyancers, surveyors, town planners and more.
This enables us access to wholesale rates. We then pass the saving onto our client partners.
Can the developer you choose boast the same? Or are they just claiming to have a strong network just to get your sale across the line?
Pardon the French but you need a keen nose for bullcrap in this game. If you catch a whiff, start running.
In this game, if you’re not networking you’re not working.
Choose a developer who has the networks to make your project happen while saving you some dollars.
7. Investigate Joint Ventures
When you partner with a property developer you are essentially undertaking a joint venture.
You are putting up the land or the capital for the land, while they are bringing their knowledge, expertise and project management skills to the table.
Spend some time researching joint ventures.
8. Have Patience and Be Sure
Remember, this is a high stakes, high-risk venture.
Shooting from the hip and rushing into big decisions is a surefire way to go bust, quick smart.
Everything in this game requires patience. If you want a quick investment with high risk consider going to the casino. Be prepared for waits.
Don’t rush the decision of who to partner with. Spend time going through this list and take some time to ponder your decision.
Make sure that you are 100% confident in your choice of townhouse developers in Melbourne before pulling the trigger.
9. Trust Your Gut
Finally, at the end of the day, property developers are people. You should always trust your gut instincts when it comes to dealing with people.
Sure, be informed and have all the knowledge you need to make your decision. But if something seems off or sketchy about a developer then trust this feeling.
At the end of the day, you are pumping in a lot of time, effort and most importantly money into a development project so you want to partner with someone you feel comfortable with.
This is a relationship that works on trust. If you feel as though you can’t trust someone, pick someone who you feel you can.
Follow these tips when picking your townhouse developers Melbourne for your project.
If you have any further questions or want to know more about the process, we’re available.
Give the team at Little Fish a call and we can answer any questions that you have.
Also, if you would like to choose us as your development partner we’d love to see if we pass the coffee test.
Our property development consultants are ready and waiting. Call now on 1300 799 277.
Finally, check out these townhouse projects we’ve completed – I share the designs and costs