The Stages of the Property Development Process

The Stages of the Property Development Process

The Property Development Process

With the property market booming for the past few years, it is no wonder why so many Australians are keen to try their hand at property development.

However, there is more to being a property developer than simply buying and selling property.

To be successful you will have to know the market and understand the intricacies of the property development process.

In this article, we look at the different stages of property development to help you prepare for your property development project.

 1. The Pre-Purchase Stage

Also known as the research stage, this is where you investigate the properties against their pre-approval, conduct a risk assessment, and start developing the concept for the site you're considering. Knowledge is key in property development, so you must do your due diligence beforehand.

It is during this stage you will have to conduct a feasibility study and gather a team of experts. A feasibility study is conducted to demonstrate the sites’ potential to turn over a profit and will require a rigorous site assessment to be carried out by industry professionals including;

  • A Solicitor – who will check the contract of sale
  • A Town planner - who will determine the site's development potential
  • An Architect - who designs a concept
  • An Arborist – who will remove trees
  • A Project Manager – who will determine build costs.

It is also advisable to contact the local council and the planning department.

They will be able to give you updates on any future planning or zoning changes in the area that might be interfering with your project and help you prepare your application accordingly to avoid delays.

2. Negotiate & Purchase

Now we move on to the action stage where you negotiate a price that will allow you to make a commercial profit. You use the results of your research in the prior stage to calculate your budget and determine how much you’re willing to pay and the value of the dwellings at the end of the project.

If you’re new to property development you better consult your buyer’s agent before negotiating the price. They understand the development process well and can negotiate the best price and save you money in the long run.

How To Get Property Developing Financing  

3. Get development approval & start planning

Now it is time for your architect or drafts person to draw up the plans according to council development guidelines.

During this time, you may also want to enlist the services of a town planner to help you during this process.

A town planner can help write development applications and handle all court matters on your behalf.

4. Drawings & Documentation

Once your plans have been approved you can start finalising your design options. Together with a line of engineers, your architect will ensure your design gets approved. People needed to coordinate the planning may include:

  • Town Planner
  • Civil Engineer 
  • Hydraulic Engineer 
  • Traffic Engineer 
  • Mechanical Engineer 
  • Architect 
  • Landscape Designer 
  • Quantity Surveyor 
  • Builder 
  • Surveyor 

Once this team is satisfied with the preliminary plans, it is time to apply for a Building Permit.

5. Pre-Construction

Time to find a builder!  This part can be trickier than you think. There are many builders out there with different offerings, so you must do your due diligence. Make sure the builder you choose is registered and has liability insurance to cover you and your project. You also want to make sure the builder can handle a project of your scale. You do this by reviewing another project the builder has taken on in the past and even speaking to some old clients to see what they have to say about their experience.

Once you’ve found a builder that you’re happy with, it’s time to draw up a building contract. It should include:

  • Construction cost & payment arrangements
  • Outline of work scope
  • What each party is expected to provide (site access etc)
  • Timeline of work
  • What will happen in case of a dispute

These are the very basics of a builder’s contract – there are likely more details involved depending on the project.

6. Site Preparations

During this stage, the building commences and you’ll start paying the builder in instalments. Payments typically get broken down into 6 instalments. The construction phase generally takes between 6-12 months depending on size and factors like weather and supply chain aspects.

1.    Initial Deposit
2.    Base stage payment
3.    Frame stage payment
4.    Lock-up stage payment
5.    Fixing stage payment
6.    Payment of final balance at project completion.

7. Project Completion

The only thing left to do now is to submit the plans of subdivision to obtain separate titles for each dwelling. You then have to decide whether you want to sell your property or retain it as an investment.

If you want to know more about how to become a successful property developer read our other articles here.

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Assured Management Limited (AML) is a boutique funds manager specialising in first mortgage construction finance and development finance in South East Queensland and Northern New South Wales with successful construction projects in Brisbane and on the Gold Coast.

We're mainly funding land subdivisions, housing estates, townhouse developmentsinvestment properties and unit blocks, with some commercial and industrial developments.

 Seek advice on your development finance needs.

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