The property development industry is one that is aligned with opportunity. It is a business that will not reward those who act on impulse or pure instinct. It requires a willingness to take risks and a devotion to knowledge acquisition over time. So the question you’re probably wondering is, how do I start a property development company? Also, It is crucial to note that if you intend to start a property development company, you must be familiar with existing laws and zonal regulations in Australia or wherever you currently reside in order to understand what is expected. Now that’s out of the way, here are some crucial steps to consider:

EDUCATE YOURSELF

When it comes to property development, you need to understand every corner of it. This industry requires a certain level of knowledge in economics, finance, valuation, and business management. There will be things that you already know and things that you don’t. Make sure you learn everything there is to know about the industry before deciding to step in. For that, you may want to consider undertaking a degree.

There are plenty of articles, books and magazines on property development available for you to read. However, if you decide to undertake a bachelor’s degree, only select reputable ones. Although many people have started a property development company without qualifications, most have degrees in either finance, real estate or economics. If you don’t have a qualification, there are an abundance of online courses available to help develop your skills.

SPEAK TO INDUSTRY PROFESSIONALS

Although reading and studying provide the necessary theoretical framework, it can be a slow process. If you’re looking to speed up the process, speak with people who work in the industry. There is nothing better than learning from people in it. Finding a seasoned property developer who is willing to share wisdom and knowledge or connect you with the industry can be challenging at times.

Online platforms are a great way to engage with these professionals (such as, via LinkedIn), as well as in-person interaction through networking events. Undertaking an internship is also another option to consider as it can help attain practical experience. Alternatively, the Urban Development Institute of Australia offers a member’s directory, networking events, conferences, resources, and professional development courses.

RESEARCH THE MARKETS

Before tackling property development, it is essential that in-depth research into the property market is conducted. This acquires an analysis of the socioeconomic climate of the area you plan to develop. Learning the facts around unemployment and other statistics can help influence your decisions. The following factors should be taken into consideration:

• Supply and demand
• Employment growth, consumer confidence and finance trends
• Economic factors
• Market cycle
• Demographic data
• Resident Needs
• Location and proximity to amenities
• Median property prices and capital growth

ASSESS YOUR POSITION

Before you plan on starting your property development company, make sure you have a business strategy ready. Even if you’re planning on starting the company part-time, full-time, or just as a way to earn additional capital, it’s sensible to have a plan in place. It is also crucial that you assess your current position. Here are the things you should determine:

• Your current net worth.
• Your current borrowing power.
• The time it take to look for potential developments.
• The time you have to manage these developments.

UNDERSTAND THE FINANCING ASPECTS

As a property developer, it is important to understand the financial aspect, as well as having the financial ability to purchase property. This means getting approved for loans, as well as partnering with financial advisors or accountants. To be eligible for a loan, you’ll need to craft a solid business plan to convince the banks that you will be profitable. You should conduct research on the different types of loans you may be eligible for, and consult with professionals about the best approach to follow. Additionally, ask yourself the following questions:

• How much personal money will it cost to start a property development company?
• How much of this money can you afford to tie up for an extended period?
• What is your strategy – develop and sell or develop and hold?
• How much money can you afford to lose?
• What is the most suitable type of development you can start?

UNDERSTAND THE DEVELOPMENT PROCESS

The property development process requires attention to detail and planning. To guarantee a smooth process, a development project will need to be managed correctly in order to reduce potential risks. The development process is a vital component to comprehend before becoming a property developer. The steps listed below outlines the process:

• Project Vision
• Finding a site
• Due Diligence
• Concept plans & prefeasibility study
• Purchasing the site
• Development Approval (DA)
• Building Approval (BA)
• Tender process
• Marketing
• Construction
• Completion – Sell or Hold

HAVE A SOLID BUSINESS STRATEGY

After you have determined your borrowing capacity and have analysed the time you can afford to give, you will be able to develop a plan to start the process. Your strategy should take into account the points made above and consider the types of developments you feel most comfortable with and satisfy the level of return you desire.

The strategy should also be based on your goals. If your goal is to earn extra capital to help pay your general living expenses, then you may consider developing a townhouse and renting them out. Or, if you want to build long-term wealth, you may decide that you want to develop a few small properties every year, sell a few and hold the balance as rental properties.

DECIDE YOUR SECTOR

Now that you have an idea of how to start a property development company, you now need to decide the sector you want to operate in. A property developer should know every sector in the industry and you should fully understand the requirements of the sector you wish to operate in. Whichever sector you choose, you need to follow its every move. It’s advised that you specialise in only one since you are more likely to dominate it. Focusing only on one will ensure that you know what, when, and where to buy, sell or rent a property.

To make your transition smoother, sourcing the right software can be highly advantageous in managing your property development processes. At Pipr, we can help you manage your stock and sales, as well as creating high-quality marketing solutions in one easy to use cloud-based portal. Find out how we can help facilitate your transition into property development here.