Property development

[Suzie-J]

Hi all,
I am new to the message board and hope you can help...

I am wondering how to find out more information about Property Development, ie: buy, develop and sell.

I currently have an investment property (keeping for long term) but want to do some short term property developments.

Do you know what the process is? Where do you start?
Are there any websites that can best direct me in the process, including what the legal/tax information to be guided by?

Any suggestions???

Thanks in advance...

Suzie-J

 

[agent007]

For Sydney you can try:

www.morganpacific.com/

For Melbourne:

www.metropole.com.au

You also can do a search in this site. There is a lot of theads in regard to this topic.

Good luck,
James

 

[Suzie-J]

Thanks James,
Metropole site is quite good.
Any other sites you recommend, I live in Melbourne?

Thanks,
Suzie-J

 

[Sunstone]

Dear Suzie,

Welcome to the forum.

This is the best property resource in Australia. Enjoy it and I hope you can help others as well sometime.

A thread of mine that could help:

http://www.somersoft.com/forums/showthread.php?s=&threadid=5653&highlight=property+development

The next step depends on what you want to be doing. But this all relates to your goals. Property development is not necessarily the end in itself but a tool that can be used to help you achieve your goals.

What do you want to be selling? Or could you work out a method whereby you are developing but holding the properties, revaluing and using the additional equity to fund your next projects? Selling isn't crucial.

For developments you need to get into your local council office get zonings maps, local structure plans and start reading, reading reading. When you have your IP information down pat this is the information that you need to build yourself up on.

Cheers,

Sunstone.

 

[zakstoja]

Hi Suzie,

I strongly recomend you organise some time to have a chat with Michael or Gus at Metropole.

Michael will be holding a weekend Real Estate Workshop which
will cover topics as you have indicated. Workshop begins this friday evening - 16th May.

He will be including an extended session on how you could become a property developer.

I will be attending along with 2 other friends, as this is the direction we are persuing.

PS. I am currently involved in a co-development project in which we have appointed Metropole as the project managers.

 

[Michael Yardney]

Suzie
Here is a long post that may answer some of your questions:-

The development process is broken down to the following stages:-

1. Pre Purchase
Here you look for a block of land with potential. Either to renovate the property and sell or hold, or a site to get a development approval / permit to construct multiple dwellings.
At this stage you should already have your finance in place so that you can know your limits plus a team of consultants who can advise you as to the projects viability. These should include a development manager who can coordinate the whole process or individually -a solicitor, an architect, a surveyor, a town planner and an estate agent (to advise honestly on end values and marketability)


2. Concept stage
You find a potential site - now you must come up with a concept for it. What can you put on it? How many units? How big? What restrictions are there?

To find out what can be built on the block I would next assess the local council's policy towards development and see how many new units/townhouses can be put on the block. We tend to have these documents in the office but they are generally available over the internet at the local council's web site, or in hard copy form from their front desks.

I would also assess what the market wants in that area and what would sell or lease well. It is important to design and build something that is marketable.
I would also do a detailed analysis of the neighborhood character as an important consideration of town planning is keeping the neighborhood character.

We then put pen to paper and do some sketches allowing for setbacks, driveways, private open space (as required by council and ResCode). These must be north facing and have other restrictions on them. We place garages and parking spaces and leave room for turning circles to drive out in a forward motion as required by council and see with the land that is left over after all of this how many units and of what size can fit on the block.

We would also take into account potential objections from neighbours.

Next comes some number crunching in our feasibility program. We include time scales, all costs including consultants and construction costs. We include likely end sale values and the profit margin we want and work out what the land is worth to us.

If it is a viable development we would consider putting an offer in for the land.

3. Purchase
We now buy the land at a price below that shown in our feasibility study that will allow us a commercial profit. I am currently finding most properties with development potential too expensive.

4. Town planning
Our architect draws up plans that fit in with the ResCode according to the council’s development guidelines. We also involve a surveyor and town planner at this stage due to the increasing complexity of the development process. This stage takes at least 12 months before you get a permit.

5. Working Drawing and documentation.
Once the permit has been achieved the architect and our engineer document the working drawings and specifications to allow us to get a building permit (interstate called a Construction Certificate (CC). This stage takes 3 - 4 months.

6 Pre Construction
At this stage we obtain quotes from builders and bank approval for the development loan

7 Construction
Finally we get on site to build our project, paying the builder progressively at the completion of each stage using draw downs from our bank loan. This stage can last 6 – 12 months depending on the size of the project.

8. Completion
The project is leased or sold


Development is a long process and involves coordinating a large group of people and processes. It requires patience and a large waf of money as things always go overtime and budget. (We alow for these contingencies in our feasibilities)
Good Luck!

 

[cool bananas]

Michael,

If you know your market area well, and you are of the opinion that a piece of land is favourably priced, would you submit an offer even before doing your feasability study just to take it of the market? I'm talking about an offer with a eg: 10 day finance approval condition, in which time you would crunch your numbers, and if they didn't stack up, you would ring the agent and tell him that finance has fallen through.


CB

 

[astroboy]

Micheal,
great post, thanx.
astroboy

 

[Suzie-J]

Thanks Michael, that's information is great.

Definately be putting in a call to Metropole.

Cheers,
Suzie-J

 

[Michael Yardney]

Originally posted by cool bananas
Michael,

If you know your market area well, and you are of the opinion that a piece of land is favourably priced, would you submit an offer even before doing your feasability study just to take it of the market? I'm talking about an offer with a eg: 10 day finance approval condition, in which time you would crunch your numbers, and if they didn't stack up, you would ring the agent and tell him that finance has fallen through.


CB

No CB
AS I know the market well I can do my homework and feasibilities quickly.
One of the ways to ensure agents ring me first about sites is to only make serious offers - they don't want to waste their time people who make offers and then withdraw them.

 

[cool bananas]

Michael,

In light of your response, I would like to know if the feasability study that you conduct before you submit an offer is a complete and thorough feas. study. Or, do you have an initial checklist of criteria which you check the site against, so that if you proceed with the purchase, there is a eg: 90% chance that the development will be successful (profitable)?

What I'm trying to get at is that if you're in a hot market (like Perth at the moment) and properties are walking out the door, you may not have a week or two to conduct your feasabilty study.

Do you have some initial criteria which you check against, and what does your criteria include?

CB