How did you learn to develop property?

I cant speak for others but I have done a couple of projects and I have learned a lot.

The first and main tip I would share is that there is no better teacher than experience. There is plenty of information out there and everyone claim that they have it figured out. You will find a lot of the information you receive is not necessarily best information, albeit there will be some gold nuggets from people who have done it before and are willing to share.

The other tip I would share is start by a small project, do it yourself. Dont get all excited about a duplex, triplex or apartment block, especially in a volatile market like Perth. Personally at the present state of market, the only place I would consider spending any money is NSW and maybe Vic. The rest of the country is up to dive nose first the moment interest rates go up. Do a small project, even a renovation or a granny flat. Ask questions, google information, ring people up and ask them and then use your own common sense.

 

very good advice

 

Since you are planning on holding on to the units I think you should start thinking about what entity to hold the properties in. Also you should get tax ruling from ATO to make sure you know how much tax and GST (if any) you will be up for. It should cost about $800 through your accountant.
Most would be developers can not do their due diligence correctly so that would be the first think you should learn about.

 

Shame! It seems almost hard to believe how many times you have been recommended in my trawling through threads on here in the last week @Westminster ! I will definitely take you up on the offer for coffee though - but I might wait until we have a bit more clarity on a couple of things first so as to not waste your time!

 

Good point @MrFox . I think in this climate when most sites/deals aren't stacking up that will be a strong area of focus.

Can you believe I didn't even do a full DD on my first project?! I bought through a BA who's company had made run through the numbers on why/when's/how developments made money, and the site they selected seemed like a good site, so I assumed the numbers they'd been talking about the whole while would stack up on it... Needless to say their figures were way out (construction was way more than anticipated. Luckily I still managed to turn a profit though.

 

Can you believe I didn't even do a full DD on my first project?! I bought through a BA who's company had made run through the numbers on why/when's/how developments made money, and the site they selected seemed like a good site, so I assumed the numbers they'd been talking about the whole while would stack up on it... Needless to say their figures were way out (construction was way more than anticipated. Luckily I still managed to turn a profit though.[/QUOTE]

You can make a lot of money quickly with property development but you can just as fast loose it. I am glad it worked out for you.

 

You can make a lot of money quickly with property development but you can just as fast loose it. I am glad it worked out for you.[/QUOTE]

True.
I know a couple of people who used a BA, unfortunately the BA expertise was not in the area of developing yet they provided a feasibility study that was wrong and a strategy that was high risk at the time.

Must be careful who you get to source sites and who you listen to, check out what they have sourced and to be able to contact their clients on their experience.

 

Very very lucky.

Due diligence and feasibility is the most important thing and something that takes practice and practice. The good thing about the market now is that you aren't rushing around like a headless chook to get a site, you can visit, look at comparables, run multiple scenarios THEN decide
8 or 9 out of 10 won't work at the moment but when you start seeing that 1 you will see a pattern emerge and get better at not even looking at hopeless ones and finding just good ones.

At the moment the patterns I'm seeing in this market
1. retain projects are doing well in the 'value add' scenarios
- some holding income
- look for corners and ROW/laneways in the $600-700k suburbs (Bayswater, Maylands, Bedford, Inglewood etc etc)
- value add options include sell off land, build house at rear, build Single Bedroom Dwelling(s) at rear
2. the ********* of **** derelict places - things that are hard to finance without some forethought

 

I know I know, very naive (and lucky) on my part. Undertaking 'due diligence' was supposedly part of the BAs selection process, and i did push them for numbers on the site before I went ahead, but in retrospect the numbers were very simplistic (or who knows, maybe they did do a thorough DD but 'dumbed it down' for me, the supposedly ignorant client). I guess I had a bit too much blind faith that 'if you do a development, you are going to make money', something I've since learned isn't the case these days.

Which I guess brings me back to the purpose of this thread - getting better educated so I can avoid making costly mistake this time round.

 

I am still making mistakes, just part of learning I guess, don't give up just get better
.

 

On that note, I'd still LOVE some more recommendations on books or courses to improve mine and my partner's knowledge of property development (even if we all generally agree that 'learning by doing' is where a lot of the knowledge will come from).

 

Another one for learning through experience here.
In my time as a builders labourer, I played a hand in every single aspect from start to finish of a couple of residential houses.
When I finally got some money, did my first duplex, no DD, all very rough in the head figures.
Couple years later did a 5 townhouse dev interstate working with a project manager, then another 6 townhouse dev shortly after.
Kept em all.
Still don't know any accurate figures to this day, but don't really matter.
I guess developing for fun is different to developing for a living.

Apart from my own practical experience, pretty much learned everything else from Somersoft before it was Property Chat.

 

The Ron Forlee books I have seen mentioned on this forum quite a bit. I haven't read it (maybe I should to stop some of my own walks of shame)

Australian Residential Property Development for Investors : Ron Forlee : 9780730315094

Australian Residential Property Development : Ron Forlee : 9780731403073

 

I have one you can borrow

 

Very generous of you @Propin ! As it turns out I actually have a copy (of the latter) on my bedside table as it was the only book on development at my library! Good to hear a few people think it is worth reading! Did you find it worthwhile?

 

@Westminster i have em if you want me to mail them to you just let me know.

 

Obviously not saying you need it , poorly worded my last post.

 

I have the property development book (2005), I think it would be worth a read for anyone interested in developing. Majority Westminster would know already but who knows, she may pick up something or be handy for dealing with her clients.

I still haven't developed. . At the time I purchased the book, 2007, I already had two development blocks. I had been speaking with the Town Planner of local council of both blocks and was informed the proposed rezoning on one of them was going to make it an 8 unit site. I spoke to a bank I was dealing with who advised I would need commercial loan and pre-sales but finance wouldn't be a problem so I was planning on selling some and my hubby retiring off the rent. Then when zoning finally went through a couple of years later the 8 unit site didn't end up being rezoned, it was one of the few houses in the suburb that didn't have an increase in zoning and it stayed a 3 unit site. When their draft was up for public comment they had a road going through half of my property. I made a submission to increase the density and suggested the road was a bad idea. They ditched the road idea but kept density the same. I only got as far as meeting with 3 companies and having plans drawn up to build two houses behind existing house and got formal finance approval but didn't proceed. GFC hit when zoning finally came through. I half owned the smaller devt site that became a retain and build behind. The other party wanted to sell so we sold in 2009. No developer interest but thank you FHB grant. I had a near death experience so put developing on hold and travelled to spend time with family for a couple of years. I'm back to having two development blocks in same council but I'm not feeling very confident with WA economy.

But, back to the book, I really liked reading the chapter about planning and design and I did cross-reference when my plans were drawn up by drafter to make changes.

I had a surveyor explain process to me also that was handy and speaking with different devt companies, bank managers gave me a better insight into timeframes, stages, inclusions and siteworks.

I didn't find the property checklist with tables very helpful. A generous SS forum member who was a developer and accountant gave me a spreadsheet to do a feasability. MTR and Westminister have provided a few great examples also.

I think it would be worth me having another read. My book is full of bookmarks, coloured stars, notes, and underlined.

I'm now less interested in developing and keeping end product to retire off rents. I may just sell off vacant land when the time is right.

 

@Propin Whats the name of the book mate?

thanks

 

Australian Residential Property Development - step by step guide for investors, Ron Forlee

Looks similar to this
Australian Residential Property Development : Ron Forlee : 9780731403073