The PROFITable Australian Property Development Process Series
Part 5 of 6: Improving Your Development Project
A property development education series in 6 parts by Billion Dollar Property Developer, Bob Andersen.
Welcome to the penultimate installment of the PROFITable Property Process Series. Remember the keyword? PROFIT. We’ve done the P, the R, the O, the F and now we’re up to the I. It’s what I call Improvement.
What do I mean by improvement? Well it’s a bit like the term valuers use. They talk about the improvement toward land, don’t they? An improvement could be a building, a shed, whatever.
As property developer, you’re going to improve the land. How are you going to do that? Well, in the case of a little subdivision for example, you’ll improve it by cutting it up into more pieces. In the case of maybe a duplex or some townhouse, you’ll improve the land by building something. That’s how property developers make money. We improve the value of land and then we profit from it. That’s improvement. So how do we do improvement?
Get A Builder
You have to select a builder. How do you do that? There are two ways you can do it: Building Brokers. Did you know that there’s such a thing as a building broker? Building brokers are people who actually have on their books, tried and proven builders. These are builders that build different types of buildings and on different locations. Driving Around. Real estate agents know good builders. You’ll also be able to see properties getting developed with the builder’s sign on the front fence.
This is the improvement part. The good news is that this is the least amount of work you’ll do during the building stage of property development. In fact, in my experience, when we’re going through the building stage, it’s about an hour’s worth of work a week. We meet with the builder once a week or if there’s nothing much happening, once a fortnight onsite. That’s what we do and we talk to the builder about what’s happening.
During this stage, we ask whether he’s on budget, how things are going, and what the plans are in the coming week. That’s it.
That’s the beauty of property development. You’re in the big league now. The builder does all the work for you on a building and that’s really cool. Your main job during the construction stage is to get the money through every month, when the builder is due to be paid.
Now the other part of Improvement is related to the building would be the marketing. If you’re going to keep your project, obviously there’s no marketing, there’s no agents, there’s no commission to pay. But if you’re going to sell, then you need real estate agent or a project marketer to sell your property.
With marketing, you might have to do a little bit of marketing earlier. If you’re on a slightly bigger project, then marketing will help you secure what banks may require: pre-sales.
So in this case, you’d have to do your marketing early before construction starts. For this one, the agents can do it for you. Otherwise, if you don’t need any pre-sales, then you need to sell it probably during construction. It’s a good time in the backend of the construction to get the property sold.
Now, this is the job of real estate agents. Of course part of your research when you’re out in the marketplace is to find good real estate agents. It’s not hard to do as you can see who’s selling. So where the for sale sign is going up, see who’s selling.
That’s it, that’s the marketing. That’s the third part of this section. I’ll look forward to going through the last one with all of you. It’s going to be a great discussion.