5 Actionable Tips to Become a Top-Rated Property Developer in Sydney in 2021

Property development is perhaps the most lucrative industry in Australia today. Sydney alone has over 5 million people striving to make a comfortable living for themselves and their families, and a good family house is right on top of the to-do list.

Property development brings tremendous profits for property developers and investors. All you need to do is find a path to do it the right way. However, as easy it may seem to generate wealth in property, its easier still not to make money at all and lose so much time if your approach is not right.

Novices often take up the mantle of a property developer with zero insight, training, and knowledge. So, to make sure you don’t start down the wrong path, here’s our beginners guide on becoming a successful property developer the right way.

I am going to share about what property developers do and how they do it. How they rise the money and where they get their advice and what strategy do they use to spot best development sites. And what is most important is how you can do exactly that.

Let’s get started.

What Does a Property Developer Do?

Before we go into the depth of discussing the ‘Hows,’ let’s take a moment to unriddle the most important question, ‘what exactly does a property developer do?’

The answer is pretty simple. A property developer is someone who identifies an opportunity in the market to increase the value of the land by increasing its population density by building more houses, apartments or offices or by re-zoning and repurposing it original use.

For instance, developer identifies areas where demand for certain type of the dwelling is greater than supply. In the areas close to the town centers with its vital infrastructure and in the zoning where council is encouraging for the higher density large block of land with has an amazing opportunity to increase it value by increasing its population density by demolishing existing structure with low density and replacing it with new higher density structures.

Example of that could be demolishing single house subdividing the land and building more houses. Or demolishing several houses and building apartment block. Or demolishing small low rise apartment block to build high rise apartment block. Or convert hi rise office block into apartment block and adding more levels on top of the existing building to utilize new height limit on the land.

But that’s just the beginning. After singling out the opportunity, property developers put together a team of professionals to assess and confirm development potential. Once everything confirmed from the development potential yield developer creates an opportunity for investors to make high yield returns by investing in acquisition and construction on the land. Developer puts its property development consultant’s team to qualify investors.

 

Here are our tips on how to be a successful property developer.

1.      Know how to finance and how to raise money for a property development project.

It always a chicken and egg situation of whether you rise funds first of the potential project or do you secure the project and then rise the funds? At the end of the day it depends on where you are in your property development journey. I have plenty of experience in the past with both options and both are working fine. However, the further you down the property development track and more track record with completed projects you have the easier it is for you to rise money first and acquire development site second.

Knowing how to finance the development projects is another crucial skill developer needs to know. What types of the finance strategies available? Do you use banks or private funds? What the difference? What are the key criteria’s to qualify for the lender? Is it your borrowing capacity or funds available? Or combination of both? I recommend you to have a few initial meetings with mortgage brokers who work in property development field if you just started or have regular update meetings with your finance team member if you are experienced property developer to be up to date with all recent government regulations that reflect lending.

 

2.      Get the Appropriate Education and advice

Today a Sydney property developer is at the height of their career, with the market doing consistently well over the past four decades. However, it could just as easily turn upside down anytime now with zero warning.

During the days of the economic turmoil and tough lending people do not buy and prices go down that creates opportunity for you as a property developer for a cheap development site acquisition. Once you are aware that you are at the beginning of the downturn cycle for economy and property it is wise not to start construction of your development projects. Once government stimulates and revamps economy you need to prepare for economy and property market to rise again and it is the best time for you to start preparation for the construction in order to have stock available for your excited buyers in the near future. The better financial climate and the more government incentives for mum and dad to buy their first home or downsize or upsize the greater demand you will be expected for your product which in terms will push the sales prices and your profit margin.

So, the best property developers not only focus on formal education, but they also try to keep up with the changing market trends and development strategies buy constantly consulting with economists, mortgage brokers and accountants.

If you’re a complete beginner, we recommend you property development courses to get you started. There are plenty of options out there. It will explain exactly what you should be doing as a property developer in real-time from the moment you purchase your next big project to getting your property on the market. It will also help you with putting together your team and find likeminded people who you would rely on for ongoing support and encouragement.

3. Get to know property development professionals

It’s a good idea to speak to local consultants such as town planners, land surveyors, engineers and builders about the project you have in mind to see how much you can afford to buy, what is the cost of the construction and what type of land you need to look for with your budget. It is one of the ways to start interviewing and putting your development team together. You can also investigate completed development in your area that are similar to the project you have in mind in order to get practice in collecting data and costs.

Property professionals will give you the best advice in their area of expertise. For instance, the architect will give you advice on the most sophisticated design where the builder is will help you to cut the construction cost by making minor changes to the design. Local real estate agents will advise on market demand for style, size, number of bedrooms and car spots for the dwellings in the area. Your accountant will be trying to reduce your tax where is your mortgage broker will be increasing your income to increase your borrowing. It is your job as a developer to put all the advice together in the perspective of the bigger picture that you have in mind and make a decision on what is the best use of the land in order to achieve the best financial outcome in the shortest period of time.

4.      Practice your acquisition skills

You need to be an area expert rather than aimlessly searching for projects anywhere. You need to Identify the product in demand in the area. Check with the local agent what people looking for the most. You also need to identify the most desirable locations and sales in those areas. Make sure you are comparing apples with apples. The number of bedrooms, bathrooms, car spots and age of the building is your main parameters. Sometimes proximity to the water or water views can have a massive impact on the sales price. Ensure you are always comparing similar products when seeking comparable sales.

You need to know your costs. Do your research on the development costs using completed projects in your area to help you started. There are three major costs in property development. The biggest cost is the cost of construction, followed by acquisition costs, then all other expenses such as professional’s fees, council fees, holding costs and GST.

You need to know your sales. In property development, land acquisition is not determined by comparable sales. In fact, it is determined by the potential sales value of the new product less the overall project cost. So do not be surprised when land with higher population density sells for much more than similar size property with lower density.

Professional costs include your purchase and sale costs as well as your Development Application and Construction Permits and also property marketing.

Make sure you lock in all the cost in order to be able to act fast when the opportunity comes.

Negotiation is a necessary skill throughout a project. Being calm and certain to react and execute when the price is right is imperative. Many real estate agents are well trained in sales. So it is just as important for you to go through the equivalent training yourself.

 

5.      Get an experienced Property Developer as Your mentor

It’s often said that the best education you can get is on the streets. It is because skills improve best when you work and not when you study. Working with a property developer can sharpen your tools and provide you with inside skills and knowledge that are not accessible to outsiders. You will learn to look at the facts from a different perspective and in conjunction with a bigger picture where even weakness is being turned into an opportunity. Everyone knows how to capitalize on the hot market but most people remain shy or in panic and mostly inactive when the market or economy hits the bottom.  Learning what information is important and what to request from your team first can help you to valuate development sites quickly and precisely and be in a position to snap a good site ahead of your competitors. Knowing the most critical parameters of the project is the backbone of your success as a property developer. Identifying and evaluating the risk is another great opportunity for you to learn the fundamentals of property development. Knowing how fluctuation in gross realization value of the development site compares to fluctuation in your development cost will help you mitigate the risks in your financial feasibility studies. Calculating appropriate financial buffer for each stage of the project will help you pass through market volatility and uninspected delays in construction.

So, starting as a property investor with an experienced developer can be your ticket to inter developers’ inner circle team where you will soak into the process with all the information at your fingertips.

 

Conclusion

Succeeding as a property developer in Sydney you will need the right advice, a skilled team, and connections with the right people to support your property development projects financially for unprecedented rewards in return.

I wish you good luck with your property development journey.