Property Development Process Part 1 of 4
Let’s look at the complete property development process and all the steps that should be part of a property development course for beginners. I wanted to explain the difference between a property development process and a complete steps of How to get into property development?
Conventional Property Development process dictates that there are only 5 stages in property development process. However, I have found that a complete property development system has lot more steps that are required to be completed in order to deliver a property development project on time and under budget. A developer must have a clear understanding of all the steps involved.
5 Stages of conventional Property Development Process:
Stage 1 – Vision
Stage 2 – Concept
Stage 3 – Consultants
Stage 4 – Construction
Stage 5 – Completion
However, when I actually got into doing property development, I figured that there are so many different moving parts between these 5 stages – that only considering these 5 stages will be just “What needs to be done, rather than the actual How to execute a property development project.
You have a vision, you develop a concept of what you’re going to develop in your development, you hire the right consultants and you get the right professionals, you get the right reports and then you get a builder and a builder actually does all the construction for you. Once the project is complete you either sell the ones that you’ve developed or you hold them for long-term investment. That’s all fine but for someone new getting into property development and thinking that it’s as easy as this, 1, 2, 3, 4, 5, I think that would be unfair to the beginners entering the property development industry. However, if you can see the complete picture before you actually get in the project or get into property development it would be a lot better. All I’m trying to do in this video is show you that complete picture of what property development looks like in its entirety.
I have put together many courses in property development in various bite sizes, which I collectively call my Property Development System. I have developed these property development courses, over the last four years of doing developments, reading books, going to seminars and of course documenting each & every step over the course of all my property development projects that I’ve done personally with my own money.
I can easily pinpoint exactly how your vision becomes a reality, what are the steps involved and what are the things that you have to do, or the due diligence checklist that you have to go through in order to be able to develop that vision in the first place, so that it can be conceptualized and all the consultants can come in and start shaping your vision.
Let’s start with this part. Before I actually get into where do you begin and due diligence and feasibility, which is part of vision and concept. I’ve actually broken it down into further steps that you can take as you go along. I think the most important thing for any development, for anything like this that you want to do, is to be able to have the right mindset and if you haven’t got the right mindset, you’ll quit half way through and you end up wasting your money, wasting your time and I don’t want you to do that. You must have the right mindset to be able to do that.
There’re people who are winners and there’re people who are losers, but there are also people who haven’t actually learned how to win yet. You can’t categorize them into winners and losers, as black and white, but there’re people who have that greatness within themselves and all they need is a right system, all they need is a right education, all they need is somebody holding their hand and telling them what needs to be done and they’ll go out and do it. You’ve got to make sure that you identify yourself with what kind of person you are. If you are that person who just wants to learn and get ahead, these are the things that are important for you.
There is a saying, “Circumstances don’t make a man, they only reveal him to himself”. This quotation is actually very appropriate for property development, because once you get into a project, that project will reveal you to yourself. There are so many decisions that you’ll have to make and let’s say it won’t be 100% clear cut as to what’s going to happen or what’s not going to happen. When I say the clear cut it’s like I’m trying to compare that to a 9 to 5 job, where you go to a job from 9 to 5 and no matter what you do there, you know the next month you have the same pay cheque in your bank account. There’s a degree of certainty.
In property development, I don’t want to kid anybody. There’s a bit of uncertainty in there. I actually embrace it because that keeps me on my toes and keeps me sharp and keeps me from slacking off. A lot of people don’t like that. If you are one of those people who would want a lot of certainty, so you know what’s going to happen next month and then property development is not going to be suitable for you.
However, if you can embrace a little bit of uncertainty, you can pull your socks up and say, no I’m going to do this no matter what happens, I’ll go through that extra mile. I’ll spend the time required so that I’m educated enough in this industry. I’m educated enough to do all the numbers. Get a really good understanding of property development, then I would say there is nothing that will stop you because everything that you need is already in there in this property development course. It’s up to you but make your mindset and ask yourself how do you see yourself. If you don’t have the correct self-image where then you’re going to face problems in this industry, because there’s a lot of things that you have to assume and allow for before you actually get into. Whereas when you’re doing a job, yes there is a lot of uncertainty that you deal with. However, that uncertainty or the consequences for that uncertainty are actually borne by the company and not by you or basically they don’t hit your back pocket they actually hit the back pocket of the company. If you’re that kind of person who doesn’t like to take that responsibility or do that, I would not worry about watching the rest of the video and find something that suits your personality. If you are willing to take action, if you are the kind of person who can take on challenges, if you’re the kind of person who can troubleshoot, if you’re the kind of person who is resourceful, I would say property development can be the most lucrative field for you as compared to any other field. Make sure you’ve got that right mindset.
When you’re in your vision stage, you want to understand before you actually make a vision for the side, I think there’re a few things that come before having a vision and that is actually finding the site. That’s what I think is more important, is to be able to get understanding of the property development industry. What happens and understanding of all these signals that you will keep with that. At the moment you don’t even know that they’re signals, but once you go through this module, you’ll understand that there’s a lot of things that you can do and the signals that you can hear in the media, the signals that you can hear from the property cycle and so on that you can pick up on to make a better decision.
Before vision that’s why I’ve think that this module here is incomplete because it only goes straight to vision, it doesn’t actually tell you how are you going to actually get to a site so you can have a vision in the first place. In property development system, you’ve got where do you begin? We discussed the overview of the due diligence, we understand property economics, what is the impact of interest rates and property prices? What’s the impact of unemployment property prices? What’s the impact of Australian dollar going up or down on property prices and so on. All these things are part of property economics and I don’t expect you to become an economics professor, but I want you to get a working understanding of these things so that when you hear something, you can look and predict and make a better decision.
Things like property market cycles. Listening for signals and I’ll teach you how to do that. Understanding statistics and capital growth what happens, how you identify these areas. I think if you go through this module in the course, you’ll be able to pick up all the hot spots yourself. Things like demographics, validating signals and setting up all to alerts so you’re alerted if something that matches your criteria comes up on the market.
– again for you to be able to get to your vision and concept stage, you got to do full scale due diligence on a property. Which is basically determining highest based possible use, which is your vision. What it does is it gives you the ability to determine how many townhouses that you can put on a block of land or how many apartments you can put on a block of land and so on.
– How do you actually select the site? Understanding zonings and overlays. How do you collect data and analyse all this data about that setup so that you can make an informed decision.
is basically you looking at your suburb from a birds eye view and understanding how it sits with respect to all the other properties that surround it.
In my property development course, I teach you how to plot all this data on maps so you can see what they look like and also determine the end value of your townhouses that you are going to develop. It’s very similar to what the valuers do. That’s what I do. I get all this data and I plot it all there and I look for evidence that helps me support my decision of I’ll be able to sell my townhouses for say, 600K once it is complete. What am I basing that on? Things like finding evidence that tells me yes, because 2 blocks from here there were townhouses which were 3 bedroom, 2 bathroom that sold for 600K. That’s only about 700 meters from my property. I should be able to achieve that price. Things like that and basically solidifying your research and having a visual view of what it looks like.
Location analysis, Two second financial feasibilities
– When you’re a developer you don’t go out and keep doing a full scale financial feasibility on every residential property development project that comes on your table. It’s counter productive. You want to have mechanisms in place where you can quickly conduct a 2 minute feaso on a project to be able to determine whether or not it is worth your while to proceed from this point on. Things like reading architectural drawings. I got this module in the course because when I started, I couldn’t read the drawings and I had to look at them and scratch my head?
Over a period of time, you get an understanding of the different architectural symbols that are used on drawings.
Due diligence checklist and risk management.
This is all part of due diligence which will unless you go through how do you actually find the site, due diligence you won’t be able to develop your vision and concept, because these 2 modules will actually answer your questions, because you need those answer in order to develop that vision and concept.
Financial feasibility again is very important. I do 2 sorts of financial feasibility. I’ve got a full-scale financial feasibility application that you get with the property development course and also a 2 minute feaso aka my smart feasibility calculator. That’s what I call it and you can use the smart feasibility calculator to determine something as an overview and get accuracy of about 80% of whether or not you need to invest more time and do a full scale financial feasibility. These are the 3 steps that I think 2, 3 and 4 these are the 3 steps that I think are very important for you to understand that property development process and the first 2 stages, which is vision and concept. I will go on and discuss all these in the next video, but if you ever want to do get something in the meantime, I will suggest you download the free property development guide or my property development blueprint.
Don’t forget to watch Property Development Process Part 2.