Media watch;
Not sure if any of you read the article in Property Investor recently but it offered a good insight into how get stuck into your developments without causing yourself too much stress and anguish along the way.
Investors need to fully understand the dynamics of property development before they enter the market. Just as the right small or medium development can be a huge money earner, the wrong one can be a money pit. – Shane McNally The following are just some things in the report that can help you avoid unnecessary headaches.
A good project needs all the right boxes ticked throughout the different stages in development and it is not worth taking shortcuts!
Doing your due diligence is commonsense and things such as knowing an area’s council regulations, restrictions and market demands will give you can insight into which direction your project can go. Minimum block sizes, local supply & demand, necessary demolitions and such information are things you need to know from the start before you can even consider going further with a development.
Call the local council and speak with the town planner so that you know what it is that is needed ad wanted and what the fees and charges will be. All necessary fees and charges will need to be factored in before you can calculate the potential profit of a development.
Will Staughton, SA based international investor believes that if you are not making at least 20%, or even 30% - 35% on a development the it is not worth doing.
Brisbane renovation guru Geoff Doidge strongly recommends joint ventures for first-time developers to increase input and reduce risk, but stresses that the right site is the most important factor in all developments. And make sure you’ve got the right team, the right town planner, the right architect or designer.
Doidge also suggests that too many people get carried away creating their developments to suit their own personal tastes instead of what the market demands. This can lead to spending unnecessary money that won’t increase the end value.
Michael Chuneys, who has been creating subdivisions across SA, stresses how important it is to be aware of all development costs and then work backwards from the profit to calculate how much to pay for an initial site and make a project work. This is an excellent strategy for auction purchases. If you have worked all costs involved in doing a development and included all charges, fees and consultants cost then you can have a realistic figure in your head from the beginning of what purchase price would make this project pay for you. You want to leave yourself a healthy profit margin.
The CCORP Team!