Q&A with a new Property Developer

Recently I had an email exchange with a new property developer regarding a property they owned. Following is the exchange that we had which you may find helpful if you own a parcel of land and wish to develop it.

Please keep in mind that the person had attended our Property Development Fundamentals One Day Workshop and was scheduled to attend our Property Development Advanced Fundamentals Three Day Workshop in the near future.

The dialogue went something like this:

Response: Determining the highest and best use of an existing asset is what it is all about. Working out what the various types of development that can be accommodated on the property and determining whether they are viable is key. Then a decision about which one to do can be made, not before.

Response: Always take advice with a grain of salt when the person offering it is yet to be engaged and can make money off doing the project even if it is not viable.

Response: Welcome to property development! 

Response: Refer back to my first comment. Push for what you need to. Don’t give up on things just because one neighbour is unpleasant.

Response: When looking at the highest and best use, do sensitivity analysis for interest rate changes. Given you will effectively be creating property for a wholesale price, retaining the assets will be easier. If you sell a few and make profit from them then this profit can be allocated to the retained asset/s meaning lower LVR and more readily being able to meet the repayments, if any debt is applicable.

Response: You make your money before you start your project by making sure what you do is the highest and best use for you.

Property Development Institute is here to help you with your property development education though any one of our workshops but probably best of all, we offer a limited number of 12 month mentoring places each year where you get to spend 12 months with a genuine property developer.

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