Small time development – How it can work for you, but is it a risk worth taking? (Ep. 11)

Everywhere you go, new townhouses and apartments are springing up in droves. Does that mean you should be getting in on the action and become a small-time developer?

In our 11th episode, the Property Planner, Buyer and Professor dissect “Small time development – how it can work for you, but is it a risk worth taking?

Listen to David Johnston, Cate Bakos and Peter Koulizos as they take you through where to begin if you’re interested in property development, the inherent risks and of course, setting your strategy before going on the hunt for a viable site.

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Show notes

  • Where to start if you’re interested in property development – education is key.  
  • Development as the ‘get rich quick’ scheme of property and therefore high risk! 
  • The power of experience on development success.  
  • Small time development is a lifestyle choice for many if you are being honest with yourself!  
  • Have you got the time, patience and appropriate risk profile? 
  • Is your partner on board? 
  • Obtaining finance for your development – commercial loans.  
  • What is a ‘pre-sale’ and is this something you need to consider? 
  • The inherent risks of ‘off the plan’ 
  • Are you developing to sell or keep? 
  • Where does capital growth fit in?  
  • What part does land to asset ratio play in your investment strategy? 
  • The danger of dwindling rental returns. 
  • Is supply and demand on your side? 
  • Location, location, location! 
  • What are the holding costs? 
  • Have you done a feasibility assessment? 
  • The hidden costs of property development.  
  • Scenario modelling – will you turn a profit if the worst-case scenario becomes reality? 
  • What are the long-term implications if it doesn’t pan out? 
  • The less properties you build, the harder it is to make a profit. 

The Property Planner’s Golden nugget: make sure you understand the tax consequences before you begin the process. Sit down with a tax accountant and work through the numbers. The cost for the tax accountant’s advice might surprise you, but you don’t want a surprise at the end of the development process, because of tax costs you didn’t factor in.  

The Property Professor’s Golden nugget: decide on your goals before looking for a suitable property to purchase. Are you going to build and sell or build and keep? The answer will determine where you buy and what you build. 

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