How to Become a Part-Time Property Developer in Melbourne’s Dynamic Market

Posted by Development Ready on Mar 20, 2017

Thinking of making an investment in city property development but not sure where to start? We’ve prepared a quick guide to get you started.

Is Melbourne a good place to invest and develop?

Melbourne is safer than most.

With interest rates enjoying record lows and the national urban population facing a steady increase given an unprecedented period of global uncertainty, it’s no wonder real estate has garnered some extra attention as of late. Prices in the Melbourne metropolis are on the rise and building projects seem to be going nowhere but up. Tim Lawless, head of research for CoreLogic’s Asia/Pacific branch, even noted a recent unparalleled “boom” in Australian high-rise construction. In addition, Real Estate Institute of Victoria President Geoff White announced he fully expects Melbourne property prices to “remain solid” through 2017.

Still, these positive forecasts come in the shadow of the 2008 economic crisis, and the RBA counsels caution for all would-be property owners. Similarly, in the “what-goes-up-must-come-down” world of economics, some experts are predicting an inevitable decline in the housing industry.

But Melbourne is still Melbourne. Whatever the shifts in the market, the city remains an international draw. Domain Real Estate reports an upward trend in Melbourne’s baseline prices, and suburbs like Point Cook continue to attract buyers thanks to Melbourne’s high standards of living and its enticing options for shoppers and diners. Even if Australian real estate experiences a downturn in the next few years, it’s highly possible Melbourne’s market will endure.

Yet, as with any business venture, be sure to do your homework. Research your prospective location as thoroughly as you can and consult with a few trusted Melbourne real estate agents for added information on citywide demographics and real estate niches that may need filling. Choose a select group of Melbourne suburbs and focus your energies on a detailed investigation into these communities and their surroundings. Ask yourself: Are these locations primed for growth? Are they sustainable over time? The more work you put in now and the more questions you ask, the more likely it is you’ll see a return on your investment.

Is now a good time?

Yes. Interest rates may be on the rise sooner than you think. Using 2008 as a warning, the RBA has promised to take steps to curb real estate loans in the near future. In a recent address, RBA Assistant Governor Michele Bullock signaled a possible plan to strengthen lending regulations in an effort to fortify the real estate market. Translation? Financing a real estate purchase is about to get more expensive for Australians investing in property outside their own residence. If you’re at all interested in creating a real estate portfolio, the time to buy is now.

Why be a developer if I can simply be a landlord?

Sites that are permit-approved for development are in higher demand than units that have already been built. If you’re looking to invest in Melbourne property, land may be the smarter choice.  Property Mavens founder Miriam Sandkuhler cited an uptick in “poorly-designed” inner-city units—an influx that could drive prices down for duplex apartments, townhouses or subdivisions. But in a sprawling urban climate, undeveloped land will always be scarce and therefore has a better chance of maintaining its value. Plus, should housing prove to slow in continued growth in the coming years, you can always divert funds toward a different, more lucrative commercial enterprise.

I already have a job that I love. Can I be a part-time developer?

You can, but you’ll need an excellent team. Be aware that development even at a small scale is a multi-layered undertaking that requires practical, proactive care. As a developer, you’ll be responsible for all manner of planning, construction and marketing should you decide to build. You may need to hire a part time project staff of managers to get your project off the ground, so to speak, particularly if you want to keep your day job.

How do I get started?  

If you’ve decided on an ideal location, take the time to carefully consider your desired listing as a whole. Some questions to consider include:

·         What’s the square footage of the property?

·         Is it situated near a waterfront with easy access to an adjoining street?

·         What direction does it face (i.e., will there be adequate sunlight if you choose to build)?

 The more research you do now, the greater success you’ll have later.

 Once you’ve found your dream property, you’ll obviously want to secure the best price. Identify areas for possible negotiation including settlement time and, of course, stick to your personal budget. Should you need financing help, approach a project financier (for larger projects) as soon as possible so they can be kept in the loop on all aspects of the deal.

After all the papers have been signed, continue to stay on top of the market. Acquaint yourself with your new Melbourne community and keep your finger on the pulse of its highs and lows. The best option for your undeveloped property site may not be the best option in six months. Always think before you begin construction, especially as resale might occasionally be a more profitable alternative.

We wish you the best of luck in your property development career.

To learn more subscribe to our updates.