With everything comes risk, and property development is no different. However, with the right approach there are ways you can de-risk your property development project.
What are the main risks of property development?
The biggest risk for novice developers is that some of them go about putting the development together like they would purchase a car. They shop around from builder to builder trying to get a slightly better price instead of taking a step back and looking at the entire project.
There are 5 questions you should ask yourself to reverse engineer the project to see if it works. Ventura iD General Manager, Kerrian Devlin explains in the following video.
What can you do to minimise risk?
There are four main ways that you can minimise the risk on your property development. These are:
1. Understand the development process
The best way to minimise your risk is to know as much as you can about what you are doing and why. Educating yourself about the processes, what is involved and what the true risks are for your particular development are essential to minimising risk. You do not have to do this alone, the right professional or experienced developer can assist in this education process.
2. Partner with a builder who specialises in developments
Building a single home is not the same as building a development, so it is important that you partner with a builder who understands the development process and has the skills and staff to deliver. Areas like site works, R-Codes and what product will best suit your end goals and your end buyers preferences, are important elements that an experienced development builder can bring to your development.
3. Partner with the correct lending team
Ensure you partner with the right lender, this may not be your everyday bank or the same lender you have used for your own mortgage.
4. Partner with the right Realestate agent or Property Manager
Depending on your end goal, you may want to either sell or rent your properties. It is important that you select your agent or property manager to match which of these goals you have in mind.
The right Realestate agent will have experience in selling new homes in your area of development, will understand what the property is worth and the right buyer to market the property to. They will be your partner in getting the price you want for your finished product.
The right Property Manager will specialise in managing rental properties. They will understand the best tenants to occupy your property and have a track record in filling vacancies quickly.
Are certain types of developments more risky?
Any investment or development has risk, the amount of risk varies on how ambitious you as a developer. If you do the research and the numbers work, the only risk is fluctuations in the marketplace.
How can Ventura iD help?
Ventura iD and Multi Living Developments offer a free consultation service so you can see if developing is an option for you. Call (08) 9241 1600.