How to guide Australian property development Business

Australian property developer

Becoming a property developer can be as simple as buying a block of land and slapping a house on it or buying an existing house, knocking it down and building a new one.

However, becoming a successful Australian property developer is a different story. It requires time, research, patience, and a willingness to take calculated risks.

The president of the Urban Development Institute of Australia (SA), Peter Jackson, says there is no real definition for property developer, which ranges from people involved in sub-dividing land to those renovating for resale or knocking down and rebuilding.

He said being a property developer was not a recipe for quick, easy money.

“You won't make a fortune in five minutes - it's a risky business. Every time we do a project we learn something.''

The steps of property development:

Although there are a distinct set of complementary steps that every property developer must follow in order to achieve the best possible outcome, the process is rarely completely linear. It is important for the developer to remain flexible and have the capacity to problem solve and think on their feet at all times, as at any point plans can go awry.

1. Pre Purchase
Pre-purchase is a fairly obvious first step in the development process. As the name suggests, it involves seeking out a block of land or established house site that has sufficient potential to either refurbish the existing property, or obtain development approval to construct multiple dwellings.

At this stage it is important to already have your finance in place or at least have an understanding of your borrowing capacity so that you know your limits and what you should be looking out for. After all, there’s no point deciding to demolish an old house and knock up five townhouses in its wake if you could not possibly obtain the necessary funding to do so.

2. Concept stage
Upon finding a potential site, the next logical step is to come up with a concept. What can you put on the site? How many units? How big? What restrictions are there?

To ascertain what can be constructed on your chosen allotment, you must first assess the local council’s development and planning policies. Often these documents are freely accessible by logging onto the local council’s web site, or alternatively you can visit their offices and ask to see a hard copy at reception.

3. Purchase
Obviously, this stage involves buying the land at a price that will allow you to make the necessary commercial profit that deems the project viable. Again, I will take you through this phase in greater depth in Part 3 of this series and explain how to negotiate the best possible deal.

4. Town planning
Your architect will be required to draw up plans that fit in with the relevant state planning codes according to your area as well as the local council’s development guidelines.

These days, as a result of the increasing complexity of the development process and associated rules and regulations, a surveyor and town planner are involved at this stage too. Be prepared for a wait, as it may take up to 12 months before you actually get your hands on that all important permit.

5. Working Drawing and documentation
Once you have finally received the permit for your development to proceed, it’s time for your architect and engineer to document the working drawings to allow you to then obtain a building permit or Construction Certificate. Be prepared for more waiting as this stage takes about three to four months.

6. Pre Construction
During the pre-construction stage you will be busy acquiring quotes from prospective builders and of course bank approval for the development loan.

7. Construction
Finally  you get on site to build your project, paying the builder progressively at the completion of each stage using draw downs from your bank loan. Although this stage can last anywhere between six and twelve months, depending on the size of the project, it’s the most exciting aspect of the development as you see all of your hard work coming to fruition.

8. Completion
Upon completion your project is either leased or sold. As mentioned in part one, retaining your development as an addition to your high growth portfolio and borrowing against its end value to progress to bigger and better investments and/or development projects is undeniably the best way to grow your portfolio and wealth over the long term.

We are Australian Property Development Advisers  helping small to medium property businesses with a specialty of understanding the space that relates to the Building and construction industry. For more information about our services contact us on 9597 9966, or at 563 North Road Ormond Victoria 3204 Australia.