Being a developer

Discussion in 'Development' started by Sydneysummer, 1st May, 2018.

Join Australia's most dynamic and respected property investment community
  1. Sydneysummer

    Sydneysummer Well-Known Member

    Joined:
    17th Jan, 2018
    Posts:
    50
    Location:
    Sydney
    I am quite interested in property development. Also I am a newbie, who has not done property development yet, but interested. Not sure how to get connected with other developer and know more people in property development .... anyone has any idea?

    Thank you !
     
  2. gach2

    gach2 Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    1,895
    Location:
    sydney
    1) Read blogs/postings by developers online. In saying that I'm quiet sure majority keep things to themselves but there are a few out there that like to put up tips and show off there developments (theres actually a few posts on here)

    2) Go do it. You will learn as you go. Your location says Sydney where entry is high and with the current market getting a bit cooler might not be the best place as a newbie thats still learning and most likely make mistakes (good as long as you learn from them). Maybe consider Adelaide or Brisbane where entry is a lot lower. Profit may not be high or existent but a good learning experience. Also if yields are higher you may end up with properties you can keep with cf+.
     
    Sydneysummer likes this.
  3. Sackie

    Sackie Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    25,034
    Location:
    Vaucluse, Sydney.
    Any experience with property investment? Imho I wouldn't be recommending to a complete newbie to get involved with development unless they have a solid grasp of the basics of RE investing and it meets their risk profile.

    You mentioned in another thread you find it hard to look outside of NSW as its not in your comfort zone . Keep in mind, imo developing will keep you many days waaay out of your comfort zone . Sometimes for months at a time.
     
    Last edited: 3rd May, 2018
    Ricky Ng, Archaon, Jacque and 2 others like this.
  4. Rowan

    Rowan Well-Known Member

    Joined:
    14th Nov, 2016
    Posts:
    93
    Location:
    Sydney
    I think some good ways to set yourself up (with knowledge and also contacts) would be:
    - owning and managing a house (through being an owner or investor)
    - being involved in all types of renovations
    - being involved in extensions
    - being involved in granny flat constructions
    - being involved in knock down rebuilds

    Aside from the obvious I've mentioned above, like everyone said this Forum is pretty great source of knowledge too.
     
    lightbulbmoment and Sydneysummer like this.
  5. Sydneysummer

    Sydneysummer Well-Known Member

    Joined:
    17th Jan, 2018
    Posts:
    50
    Location:
    Sydney
    Many thanks to Rowan, Leo2413, Gache. Opinions from you are very valuable to me.
    For gaining the development knowledge, I am thinking of the three days workshop and approaching university to pick up some subjects related to property development. I have read some books for property development, I feel it is a hand on stuff. The books do not really bring me the skills to do property development. I only have a general idea what it would be. It has to be hands on,
    For real life practice, I am getting finance ready to purchase a piece of land with development potential within my budget. I don’t mind to purchase in Brisbane. I am still thinking if I want to move to Queensland. That’s one of my plan. But I don’t have idea which piece of land would be potentially developed.

    Not sure if my plan above would be helpful to start from somewhere.

    Thanks again.
     
  6. Sackie

    Sackie Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    25,034
    Location:
    Vaucluse, Sydney.
    What kind of feasibility have you done on the project to determine if it's viable in terms of profitability? There is alot of land available everywhere and most won't yeild a profitable project. Think very carefully before you waste alot of time and money .
     
    Archaon and hobartchic like this.
  7. Morgs

    Morgs Well-Known Member Business Member

    Joined:
    7th Dec, 2017
    Posts:
    1,791
    Location:
    Sydney NSW
    Start small...... get practical experience... build your network

    There is plenty of theory to it but my experience is you need to go through the process before appreciating the challenges
     
  8. Rowan

    Rowan Well-Known Member

    Joined:
    14th Nov, 2016
    Posts:
    93
    Location:
    Sydney
    Better start than most, great job.
     
  9. Sydneysummer

    Sydneysummer Well-Known Member

    Joined:
    17th Jan, 2018
    Posts:
    50
    Location:
    Sydney
    Go through the process.... you mean follow someone’s project and go through the process ?
     
  10. Sydneysummer

    Sydneysummer Well-Known Member

    Joined:
    17th Jan, 2018
    Posts:
    50
    Location:
    Sydney
    I did not make myself clear. I only have a rough idea to purchase a land with house on top of it. I hope this land can be developed later. I don’t want to jump into property development straight away. I need to learn knowledge and skills first. I do need to do feasibility to find this piece of land with property on top of it. That’s why I narrowed down to learn feasilibty.
     
  11. Morgs

    Morgs Well-Known Member Business Member

    Joined:
    7th Dec, 2017
    Posts:
    1,791
    Location:
    Sydney NSW
    If you can find a way to do that then great - or work for a developer, do a JV project with someone more experienced, etc.
     
  12. JDM

    JDM Well-Known Member

    Joined:
    19th Jan, 2016
    Posts:
    465
    Location:
    Brisbane
    Read lots and find a mentor is probably the best starting point. You can then start to get practical experience from there.
     
  13. Bashar Ibrahim

    Bashar Ibrahim New Member

    Joined:
    28th Oct, 2019
    Posts:
    1
    Location:
    Sydney
    The best way to learn and grow in this industry to immerse yourself where you can and make connections.

    I started as a labourer on building sites around Sydney, worked on networking with anyone and everyone I could and now I own my own property development company.

    Obviously, a lot more work had to be done to get to this point but sometimes getting a general foot in the door can help you get to where you want to be.

    Good luck,
    Bashar Ibrahim
     
  14. Paul Mete

    Paul Mete Well-Known Member

    Joined:
    12th Mar, 2019
    Posts:
    82
    Location:
    Melbourne
    Hi Sydneysummer we are developers and although we do not fully understand your situation we can offer you some advice for starting out.

    Don't give up your day job! Start by developing whilst you enjoy the safety of your current job.

    We suggest you start with a simple development. The actual values are always location "centric" but the simplest form of development is dual occupancy. You can dial up or dial down values depending on location but stay simple first up.

    Get the right people on board. A good Building designer or architect and a good builder are the key.

    Do your homework as the art of any development is in the buying.

    BEST OF LUCK!
    Paul
     
  15. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    A good start is learning the numbers. Dont do that and its a plan to fail.

    Our developer toolkit starts with the basic of tax (income tax, GST etc) since the ATO will be your partner in the project it pays to know what their share is. It may be bigger than your share but hopefully its not. And their share is guaranteed.
     

    Attached Files:

    jsoe000 and lixas4 like this.
  16. Brumbie

    Brumbie Well-Known Member

    Joined:
    5th Mar, 2018
    Posts:
    190
    Location:
    Canberra
    Thank you for posting this. Could you please clear one thing up for me. In 7.6 of the document it states that the margin scheme "can only be used once" and if you buy land with the margin scheme applied you can not apply it in the sale.

    This is not my understanding of how it works. You cannot claim an input tax credit for the GST on land using the margin scheme but can use it on the sale.

    From ATO:
    "you are eligible to use the margin scheme if you either:
    • purchased the property before 1 July 2000 (the start of GST)
    • purchased the property after 1 July 2000 and one of the following applies to the seller
      • they were not registered or required to be registered for GST
      • they sold you existing residential premises
      • they sold the property to you as part of a GST-free going concern or GST-free farmland, and were eligible to use the margin scheme
      • they sold you the property using the margin scheme."
    GST and the margin scheme

    I have also checked quite a few other sources and they say the same thing.

    Appreciate your comments.
     
  17. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    Hmmm thats wrong.... should say : If you paid creditable GST on the land acquisition you cannot use the margin scheme. This is a value avoidance rule that would defeat the nature of only incremental GST applying to subsequent supplies. That issue is rare for land. Land is different to a input taxed supply of residential housing which includes land. The vendor may well be unregistered allowing use of the margin scheme BUT not all unregistered parties allow the subsequent sale to be eligible and some transactions are not entitled to use the margin scheme. I recommend legal advice prior to execution of the contract.

    Other examples of those who cant use the margin scheme

    • owner inherited the property from a person who was not eligible to use the margin scheme eg inherit a parents house or holiday home, farm etc
    • owner obtained the property from a fellow member of a GST group who was not eligible to use the margin scheme and who had purchased it from an entity that was not a member of the GST group
    • owner was a participant in a GST joint venture and obtained the property from the joint venture operator who had purchased the property through a sale that was ineligible for the margin scheme.

    I recall updating that in a rush days before flying oseas in June. I wanted to give better clarity and skipped the important 2005 and 2006 amendments to the rules. I recall the once issue arose from a edit relating to the last exception....Time to fix that . Thanks
     
    Brumbie likes this.
  18. Brumbie

    Brumbie Well-Known Member

    Joined:
    5th Mar, 2018
    Posts:
    190
    Location:
    Canberra
    Thank you very much. I agree on your interpretation now. That's how I read it. I am new to developing and was attending an auction tomorrow for some land with the margin scheme applied at 7%. Started panicking as all my figures were suddenly screwed up if I had understood it incorrectly. Just goes to show tax is a very complex area and getting it wrong can scuttle your projects profitability very easily. Your developers toolkit is a very good read. If anything, I suggest for people to have a skim through it and understand if they need to get professional help before undertaking development if they do not understand where they sit in the tax minefield.
    Your tax spreadsheet has piqued my interest! Is this available to buy on it's own?
     
  19. Car tart

    Car tart Well-Known Member

    Joined:
    16th Sep, 2018
    Posts:
    916
    Location:
    Sydney-Melbourne
    Remember that you don’t make a profit on every deal, so don’t sink everything into a sink or swim situation.
     
    Terry_w likes this.
  20. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    I have posted the corrected Developer Toolkit. Review of past versions indicates I seem to have accidentially cut a chunk of text out AND then buggered up what was left in my haste. I found the incorrect reference to once and its now put back into its correct context.

    I hope this now provides better explanation.
     

    Attached Files:

    WandereringTribe likes this.

Buy Property Interstate WITHOUT Dropping $15k On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia