How to Get Started in Property Development
Property development is a lucrative and fulfilling career. Discover how you can start off on the right foot as a property developer in this article.
Being a property developer can be a professionally and financially rewarding career. But that is just half the story.
The reality is that the success of property developers hinges on a lot of risk-taking and commitment.
If you’re interested in becoming a property developer and are willing to take on the risks, keep reading. Let’s talk about how you can start a career in property development.
But first, let’s get into detail about its benefits.
The 4 Benefits of Becoming a Property Developer
Benefit #1 – Higher Profits
Doing property development in the right location and at the right moment will definitely yield huge profits. And if you play your cards right, a huge payday awaits you at the end of every project—even in the face of market challenges all around the globe.
Business News Australia reports that seven property development companies in the country were able to have combined net earnings of $2.9 billion within the first half of 2022. That’s thanks to their ability to capitalise on prime market conditions from both residential and commercial sectors.
Benefit #2 – Tax Incentives
Tax matters can be complicated especially for property developers. But what you should know as an aspiring developer is this:
There are certainly a lot of tax incentives that developers are afforded by the Australian government.
Among them includes being able to claim back Goods and Services Tax on the cost of certain projects if you are registered for GST. Plus, you can also claim GST on construction costs if you are developing properties as a taxable supply. You can also avail of Capital Works deductions after a while.
Benefit #3 – Easier Access to Financing
If you are able to complete your first property development project smoothly, you will most likely gain access to easier and more financing options. This means that lenders will accommodate your applications for your next projects.
So, be sure to maintain a good relationship with banks so that it will be easier for you to get to work.
Benefit #4 – Maximise Rental Returns
If you are planning to rent out your own property development, then you can maximise returns compared to purchasing rental properties.
Plus, since you will be paying less for developed property versus a purchased one, it will be easier for you to hold on to your rental property should the market go on a decline.
What You Need to Become a Successful Property Developer
Succeeding in property development is never guaranteed. In order for you to become a successful property developer, you need to:
- Be ambitious and patient: Ambition is a crucial part of being a property developer. You need to have the right drive to move forward with planned projects no matter the risks.
But you must also balance it out by having the patience to go through every step of property development. Remember, Rome was not built overnight. The same is true for any property.
- Have more knowledge than you think: It takes a considerable amount of time to learn everything you need to be a successful property developer. You need to have the technical, financial, and legal aspects down pat before you can get started.
Most often than not, no matter how much research you’ve done, there will be things that will be new to you about property development. It’s an inevitable part of the process.
- Start small: Most of the mistakes you’ll make as a property developer will happen in your first few projects.
To minimise the impact of such newbie mistakes, start small. Small projects like townhouse developments or duplex developments can be great cash flow drivers in the beginning. It can also help you get familiarised with the industry with less risk. Don’t ruin your chances by going all-out and developing a skyscraper on your very first try.
5 Steps to Becoming a Property Developer
Step #1: Study the Property Development Process
Research is your best friend when it comes to becoming a property developer.
You must take the time to read up on the property development process. There are plenty of books that could help you, such as the ‘Australian Residential Property Development: A Step by Step Guide’ or ‘An Intelligent Guide to Australian Property Development.’
I also recommend that you enrol in a course (or maybe even two) to get started in the proper way.
Step #2: Talk to Established Developers
Studying property development is one thing.
But you need to supplement your learning by talking to established property developers. They can provide insight as to the best practices that they learned along the way. This will give you a better understanding of the current property market and what to do in certain situations.
It’s definitely not going to be easy to talk to property developers right off the bat. So, be sure to be polite and reach out to them via the proper channels to avoid any complications.
Step #3: Find the Right Location
Once you’re sure that you have enough information on how to be a property developer, it’s time to move on to the next step: looking at where you’re going to buy land.
For your first property development project, it’s better to do it in the vicinity of an existing residential area compared to undeveloped land. Developing property in the former will minimise the risk of getting no potential renters or buyers.
Step #4: Know Your Council’s Regulations
Now, before you go ahead and buy the land, you must also first familiarise yourself with the property development policies of your local council. Bear in mind that each local council will probably have different policies when it comes to property development.
Fortunately, there is software that can consolidate all the relevant data so you don’t have to run around gathering it yourself.
Step #5: Prepare Your Finances
As a property developer, you must also prepare your finances even before the project comes up. This is one of the most crucial aspects when it comes to property development. So, be sure that you are financially stable before you get too deep into it.
Some of the expenses that you will need to deal with include the following:
- Acquisition costs e.g. contract price, stamp duty, adjustments, and conveyancing
- Planning costs e.g. surveying, interior design, and demolition
- Marketing costs e.g. renders, printouts, and paid ads
- Construction costs e.g. build contract and contingency
Start Your Journey to Becoming a Property Developer Today
There are a lot of things you need to consider to become a successful property developer. But at the end of the day, what matters is how determined you are to achieve your goals.
If you are willing to do the work needed to become a property developer, then success awaits.
One tool that can help you become a successful property developer is Archistar. Archistar helps property developers find a site and calculates the feasibility of the project. It also helps new property developers without industry knowledge or connections to find and build profitable projects.
Schedule a free demo today.