How did you learn to develop property?

Hi all, I would love some advice on how my fiancé and myself can best educate ourselves prior to undertaking a duplex (possibly triplex) subdivision development in Perth.

Obviously this forum is a massive resource and I have already found it hugely helpful (as well as SS before it), but as my fiancé doesn't quite share my enthusiasm I'm after a more 'structured' source of information, be it a book, course or other resource that can be worked through from start to finish.

I'd love some thoughts from those who have gone down this path yourselves I know there are a couple of thread stumps on this already but I know we/you can do better! I might consolidate some of the other recommendations I've come across here too.

I'll post a bit more background 'on us' in a sec. Thanks in advance guys

 

About us:
Me: I have some understanding of property investment and development. I have done a duplex subbie (completed last year) which I engaged a development manager to manage for me (an expensive mistake), so I understand the process roughly, but not necessarily the details and order at which things need to occur. I'm also an urban designer/town planner so am familiar with the R-Codes/Schemes etc and have a good understanding of the subdivision development process on large scale projects, but less understanding of smaller details that would normally be left to other consults (engineers, surveyors, development managers) on larger projects. I love to educate myself but don't have endless spare time so I'd like to be focused in my up-skilling but am happy to hit a few different resources.

My partner: A relative property investing and development newb! Has some understanding of things from hearing me rant about my previous project but could definitely do with an overview. She is an engineer so understands plans and sites but not the finer details of residential development. She is time poor and is still 'discovering her enthusiasm' (!) so will probably commit to one book/course at most - so I want to make sure I choose the right one! The more interesting/fun the resource the better!

I am mainly interested in the finer details of developing in Perth (ie 'once you have had this approved, then apply for this'; 'whilst that is being installed, organise this through this agency', etc etc) which really is pretty WA-specific information.

For my partner it is probably more about recommendations on great books/courses/online resources for more general development education/information. That being said I am definitely interested in this aspect also.

Thanks guys

 

Hit up @Westminster - she's our resident guru and does mentoring as well. ( by 'our' I mean PC in general)

 

Construction is close to being complete on my first development, not really going to be able to give you too much insight. I leveraged off contacts, spoke to those that had done it before. Had a 'mentor' type family friend who does large developments that I leveraged off at times. A lot of trial and error.

On a side note, Engineer & Town Planner - pretty good combo!

I would be speaking with @Westminster she has run's on the board and does a lot over that way.

 

What do you consider a developer to be? A developer is a person with the vision, creativity and the one to make the deal happen. They create a product that people want to buy and than coordinate the process. All developers I know use multiple consultants for their projects and that is how they manage the process.
A good book to read if you interested is called "The Accidental Developer" about Henry Pollack.
You can't learn how to be a developer from a book though. The best way is to find a successful person that does it and ask for help.

 

Sounds like you know a lot more than you think

Your wife may be holding you back. ... As they do!
Just jump in and tell her to hang on for the ride! you're the ring leader of the dev circus and just keep her informed as you're moving forward.

I'll send you an invoice for my time if that will make your wife happy

 

"Just do it" - St Nike

By all means educate yourself to the hilt before proceeding (what I do) but nothing beats actually doing it.

My first one I ever did I had no clue and didnt even know what a feaso was but still came out ok thankfully.

You make money when you purchase so I would advise you engage a BA experienced in decelopment site selection.

@Westminster is a good contact.

I can recomend another reputable contact via email or PM who can find a site and do a feaso for you. They have an inhouse surveyor as well.

 

you can do a search and read some of my development projects including somersoft forum. Perth and Melb projects, may helps.

If you are in looking at Perth, very dangerous, no money in developing, Don't let anyone tell you otherwise, rents falling, market falling..I am going to be very honest regardless I have nothing to sell

 

You've got an awesome set of skills there so I'm not sure books/courses are the way for you guys but you will learn some things. With so many permutations on how to do a development I don't think there is always a right and orderly time to do things.

As @MTR says it's not a pretty time here at the moment. If you want to sell straight away then I'd say 'don't do it' if you want to take advantage of some low prices and some good construction deals and are prepared for it then it's a cautious 'go for it'.

How did your duplex go last year? Did you keep or sell?

BTW thanks for the recommendations from @Jess Peletier and @Colin Rice but I'm not taking on clients at the moment as I've reached peak workload. However I'm happy to meet up for a coffee with both of you and of course there is lots of assistance on here.

 

So what I'm hearing from this and other threads is:
1. Learn by doing.
2. Get a mentor.
3. Educate yourself to 'fill in the gaps'.

Or should that be in the reverse order?!

I am definitely the type to take action, so no real concern there, however I DO like to feel that I know what I'm doing first and I admit that I probably over research things. I feel it is probably better this way round than the opposite, so with that in mind I'd say my style is definitely one of research, research, research, then TAKE ACTION.

(Interestingly enough, my partner's approach is definitely one of 'resear...TAKE ACTION)!!

 

Hopefully!!

My general perception is that I/we could probably undertake a development tomorrow and complete it. I'm just not sure it would be a quick and profitable one! At present our knowledge gaps are in knowing the order that things should take place and when to do things. I'm sure at each given stage we could find out what to do next by asking people (consultants, forumites, council) but this would mean delays at every step as well as missing the odd thing which should ideally have been initiated several steps earlier, even if it didn't need to be.

My basic concern is that, given Perth's generally flat market at the moment, duplex/triplex developments aren't just a guaranteed money maker. Therefore unless done well they may be a huge drain on my time without actually delivering any real profit. I want to do it well - that's why I want to get educated.

I agree, a mentor would be invaluable in terms of preempting what needed to be done, but I'm conscious that to have someone that involved at all stages would be a pretty big drain on their time.

 

Hmmmmm, that is definitely a concern of mine @MTR . I was hoping the PC forum would dispel my concerns though, not the other way round! I very much appreciate the honesty though. Are your concerns principally around the cost of sites; development costs or capital growth/resale values? I have typically had concerns around the latter, though as I am developing to hold I seemed to have convinced myself that IF it is an ok time to buy property in Perth (for the long term, opened to debate I know) then surely it is better aquiring those properties at a discount by developing them yourself?

 

Thanks @MTR . I actually have a bunch of your and @Westminster 's threads bookmarked to read through!

 

problem is the Perth market is still falling, so what you consider a bargain today may/will be expensive tomorrow.

I have been around the block a few times now to know that the way to reduce your risk is to watch when markets start to change, or alternatively buy to add value. The problem with this strategy in Perth is you still need buyers, and we currently have oversupply and by the time you complete the reno or development end values may be less than you projected.

If you buy to hold forever then that is a different beast but that is speculative IMO and high risk in a falling market.

Of course you need to be comfortable with the choices you make, and this is just my opinion from my experience we all have one.

MTR

 

As mentioned, our plan is definitely to develop and hold. So in theory we are happy to ride out a couple of flat years (though, obviously not ideal). I don't know if that last sentence just shows my ignorance though - cheap construction and low holding cost asside choosing to aquire properties you think are going to fall in value seems foolish.

My first duplex project went 'quite' well @Westminster . At completion I think I was up about $60k on paper (sorry I'll have to get back to you on the ROI%), however I've just had the properties revalued 12 months later and the recent drop in values (or maybe just a more realistic valuation) has eaten up most of my profits. Still, at the very worst I acquired another property without any buying costs.

 

Would you consider buying interstate???

 

I guess it is worth mentioning that part of my reasoning for spending some time getting educated is that I don't think 'delaying' my project a bit is going to mean the end of the world. In fact it may be just what the project needs!

That being said, I tend subscribe to a contrarian investment philosophy in most of my investing (buying when others are fearful/at the lows) which in Perth's case I am hoping translates into perhaps getting into the market a touch early, wearing a year or two of flat/slightly negative growth but being in for the full upside and having benefited from developing in a buyers market (less competition for sites and builders = cost and time saved).

That raises another good question though: do you think it actually is a buyers market in Perth for small development sites or is there actually a bit of competition out there atm? My perception last time around (circa 2013) was that as the overall property market was flat more mum and dad investors were actually looking at adding value which was creating quite a bit of competition for small development sites. RE's and BA's would have you believe the same thing right now, though it is in their best interest to have you think there's is stiff competition for sites out there!

Anyway we are probably getting off topic, but this is all really valuable stuff and hopefully of some interest to others who stumble across this thread looking for info on development education in/for Perth.

 

I would definitely consider buying interstate if we were going down the straight 'buy and hold' path. But I would only undertake a development in Perth, for a number of reasons (current knowledge, usefulness of knowledge gained, convenience).

 

I get this.

You still get to learn if developing interstate, can actually be fun, as it opens doors because you may have one market going pear shaped such as Perth and the other booming such as Melb.

Get to network with other developers interstate and provides more opportunities to make money.

If I did not step outside my comfort zone I would not be developing or perhaps worse losing money, a paper loss is actually a real loss. If you can continue to make money in other markets this will get you to your end goal much faster.

I saw this happen in the last boom of 2001 in Perth, when it crashed in 2007 most Perth investors I knew at the time continued to play in the Perth market and started losing money, I jumped into the Melb market, dumb luck I call but it saved my bacon big time and most of my networks are over East so I have at least 3-4 markets to play in.

All to their own

MTR