At first glance, property development seems like a pursuit for connected, experienced, wealthy people. In truth, anyone can become a property developer. You don’t have to have a property background. You don’t have to be a builder. You don’t even have to have a lot of money.
Property development – when done right – is a wealth generation strategy that offers high returns, financial freedom, and generational wealth.
Most people hesitate to pursue property development because they think it’s too hard or too risky or too time consuming. This guide explains how you could start your property developer journey with confidence even as a complete beginner.
Learn the Basics: Education and Resources
This first step is all about creating a foundation of knowledge upon which you can build successful property development projects. Experience comes later.
The best place to start is to learn the ground rules of property development. Getting a grasp of the basics will help you understand the lingo, the process, what’s important and what’s not. You don’t have to learn everything right away, just enough to stay out of trouble.
There are plenty of resources available. Many are online and easy to access. Here’s what we recommend:
- Start with simple web searches – Take a little time to investigate current trends, articles, and online communities. Use your commonsense as not all content is created equal. Nevertheless, it’s a simple place to start.
- Listen to podcasts – You can find great information relating specifically to property development and also about related interests like investing and real estate.
- Read books – There are lots of books available now. When Bob wrote his book there was almost nothing published on the topic of property development.
- Invest in training – There are free and paid training options available to you. Most are online. You can choose from events, online courses, mentoring, and more.
- Start networking – Make connections with professionals like real estate agents, buyer’s agents, builders, experienced developers, town planners, and alike so you can learn what is happening right now.
Research: Understanding Locations, Demand, and Trends
The first step in any property development project is finding a viable development site. In order to find a viable site, you must learn everything about that location, the market, trends, and opportunities.
A great place to start is learning about a single area that interests you, one that is likely to contain potential development sites. You might choose somewhere close to your home or workplace. You might even choose to perform your research online.
To get started, investigate:
- Population and infrastructure growth
- Access to important amenities like schools, shopping districts, major roads, parks, etc.
- Rental and sales returns
- Council attitude toward developments
- Future infrastructure plans
Your goal here is to become an expert in your own “patch” so that you can make educated decisions about development sites that may be worth pursuing.
Start Small: Low-Risk Entry Strategies for Beginners
Not all profitable developments are large-scale. You can make a decent profit on smaller developments. And this is where we suggest that you start.
When we talk about property development, we aren’t talking about renovation projects and flipping houses. We are very specific about creating something new. That means adding something to the property.
Smaller projects that you might consider are:
- “Splitter” developments – build an additional residence on a block of land that has an existing residence
- Duplex developments – build two connected residences on a single block of land
By starting small you can avoid some of the complexities involved in larger projects.
Another important consideration is choosing a project type that fits your budget. There’s no sense going too big too soon.
The final factor is your risk tolerance. It is definitely helpful to choose developments that won’t be overwhelming.
Secure Financing: Funding Your First Property Development
Financing property developments is different to buying a house. You have many more financing options, understanding these might be the difference between a profitable project and dud.
There are many options for you to investigate. We urge you to seek professional advice before you commit to a deal. Here are some financing opportunities to consider:
- Banks
- Joint ventures
- Vendor finance
- Private lending
There are more creative strategies to look at if you want to dig a little deeper:
- DA uplift
- Call options
- Property syndicates
Consider working with a finance broker with property development experience or seeking a mentor who knows how to make development finance work.
Build Your Team: The Key to Success
Property development projects are not solo journeys. You will need to work with a variety of experts to ensure the success of your project.
Here is a list of experts that you will likely want to connect with:
- Real estate agents
- Buyer’s agents
- Valuers
- Finance brokers
- Town planners
- Council staff
- Architects
- Builders
- Engineers
- Accountants
- Solicitors
- Experienced mentors and advisors
An important consideration is finding experts that have direct experience with property development. This is especially important when finding the right accountant and solicitor.
Be sure to take your time to build a solid team. Solid recommendations from experienced developers can be a good place to start.
Avoid Common Mistakes: Lessons for First-Time Developers
Property development is serious business. If you fail to understand the process and the risks you really can find yourself in trouble. However, when you have the right knowledge and support, you really can make it big.
Here are some common mistakes that you can avoid by taking the time to learn a proven system:
- Underestimating costs
- Overestimating profitability
- Making emotional decisions
- Not performing correct due diligence
- Miscalculating financial feasibility numbers
- Misunderstanding zoning and planning restrictions
- Not having a financial buffer
- Paying too much for financing
- Poor project management
- Hiring the wrong people
Remember: successful projects require active project management.
Want to learn more?
If you want to learn more about getting started in property development, here are three podcast episodes worth listening to:
