Property Development Consultants

Returns are measured in multiple ways: Return on Investment (ROI) measures end profit against the total costs, including bank finance. Smaller developers are typically happy with +/- 15% post-sales and post-GST, and larger developers +/- 20%. Return on Equity (ROE) measures end profit against the amount of cash that you put into, excluding bank finance. A successful development should return you 50%, so that for every dollar you put in, you get $1.50 back.

Everybody’s circumstances and objectives are different. Some clients develop for profit, and use those profits to supplement their lifestyle and/or tackle ever bigger projects. Others tackle property developments as a smart way to build their property investment portfolio quickly, and get great tax depreciation benefits on the newly built properties. An important consideration is tax – if you sell newly developed properties, you will need to pay 1/11 in GST, which significantly impacts on profit.

You can read all the text books and case studies, and attend all the workshops and sales pitches you want, but ultimately, you only become a property developer by doing. The key though (and this is true for experienced developers too) is bringing together the right team of professional consultants to give you the best possible advice throughout. Ask anyone who has tackled a development, and they’ll tell you that the most important element of success is purchasing well – do all your due diligence and feasibility work prior to purchase so that you go in with your eyes wide open.

We advise clients who are starting out in development to begin with a purchase budget of $1m+. To complete a modest duplex development, you will need at least $0.5m in savings in order to satisfy bank lending requirements, pay consultants, meet holding costs, etc. Property development in Melbourne isn’t cheap, but our rule of thumb is a 50% Return on Equity, meaning that if you tip in $0.5m of your own money, you will walk away with at least $0.75m upon development completion. Not bad, particularly if you appoint a property development advisor to project manage the bulk of work.

There are a lot of moving parts to townhouse developments, and a myriad of different property development consultants to appoint and coordinate. A good project manager will pull all of their work together in a timely fashion. Some of the key consultants include: Town Planner, Land Surveyor, Arborist, Architect, Structure Engineer, Civil Engineer, Traffic Engineer, SDA Specialists, Builders, Buyers Advocates. Good professionals are busy, and are very mindful of tyre kickers, so it’s important to have an actual property development to brief – don’t expect much feedback if you simply call up and say that you want to get advice about property development.

Firstly, you need to buy well. Just because a property can be developed doesn’t mean that profits can be made in developing it. Every Melbourne suburb is different – you can do a development in one suburb and make big profits, and do the exact same in another and lose your shirt. Secondly, you need to have a good network of consultants that you can trust to give quality advice based on experience. As with any profession, there are good and bad operators, so building and maintaining relationships with successful consultants is critically important. And, one final piece of advice – recognise that you as the developer are the one and only person truly responsible for all decisions, costs and timelines. Accept total accountability and you can succeed.