‘Your First Time’ Why Most Developers Avoid the Planning Stage

Most property developers simply do not understand the first stage of developing; the stage of sourcing the appropriate land, and planning and design. We have all heard the stories of disappointments, setbacks, long delays, and Planning Application refusals from Council. There are losses, which could have been avoided if only developers had a broad understanding of planning rules and regulations, and their consultants and contractors had abided by the planning regulations correctly and performed due diligence before applying for permits.

Most developers find this stage too difficult and try to avoid it. Instead they only purchase land with planning permits ready to go; even if they are forced to pay a premium for the privilege. That’s fine if you want to spend more than you really should and not willing to take the challenge.

However, I can tell you with confidence that if you are willing to grasp the planning stage of developing, you will make more profit on your projects.

Setting up the right structure

First things first. Before you start the development process, you need to decide if you are going to hold or sell the property. This is even before you start looking for a site. Different structures can lead to different tax outcomes – be they income tax, capital gains tax or GST implications. It is important that you seek advice from your tax specialist and legal advisor on what sort of structure best suits you. I can’t stress enough on the importance of seeking that advice at the start of the developer’s journey.

Many times I have seen successful developers complete a project only to have most of the profit handed back to the ATO!

A little bit of well-spent time at the start can save you a lot of money at the end.

Advisers

When it comes to consultants, it is imperative to deal only with those who are qualified to give advice. Ask to see their credentials. Ask revealing questions like: Have you developed property yourself? What type of developments do you specialise in? Ask about other clients of theirs who are in the property field. This also goes when you are looking for lawyers, conveyancers, builders and accountants. Don’t be afraid to ask to see their qualifications.

Having the right advisers will not only save you money but can help you grow by building your network of contacts who bring you business.

Adviser’s fees

I’ve been asked many times about the huge fees associated with consultants and advisers and my answer is always the same; if you pay the right people the right amount of money to do the right work, you’ll be successful. If your advisers have given you the right advice and you have made a better return than initially envisioned, then pay them what they are worth. I rely on my consultants and advisers to do what it is they’re good at and I pay them handsomely for it.

Starting out, the benefit of an experienced company or developer

As I mentioned, to be a successful property developer, you need to be aware of the pitfalls associated with starting your own project. Many have decided to follow their dream of being a property developer, thinking they can go it alone, only to find it is not the easy street they thought it would be. If you want to be successful, you need to seek the services of a people or company’s who is experienced, and who is knowledgeable in all aspects of subdivision, developing, building and all matters associated with it.

There is too much time and money involved to start a project without the advice of experts.

CEOs of the most successful companies are successful because they engage experts help them reach the company’s goals. They know it can’t be done solo. Seek help, get the best advice and you will be successful. The journey today’s successful CEO undertakes is more than just making money or as Henry Ford said “A business that makes nothing but money is a poor business”

How Infrastructure Status to Affordable Housing Is Beneficial to Both Developers and Home Buyers

In order to revive the slump-hit real estate industry, the Union Budget 2017 put-forward an announcement which was a win-win for both home buyers and developers. The finance minister granted an infrastructure status to affordable housing, this move is directed to give a boost to affordable housing. This proposal has been received positively by the real estate industry – right from middle-class home buyers, developers and home loan providers. The final aim of the Affordable Housing Sector Infrastructure status is to boost government’s target of providing housing for all by 2022.

Let’s get to know what benefits will be derived by real estate developers and home buyers:

Higher investment in affordable housing:

The union budget 2017 also proposed that NBFC will provide up to Rs. 20,000 crores of individual loans. The affordable housing means probability of high investment opportunities as home buyers can avail loans at a cheaper rate. It is predicted that a lot of players and new lenders will emerge with this move as interest rate moves downwards, resulting in high demand for residential real estate.

Tax exemption for developers:

Developers will get some relief from tax. The profits earned by builders will not have to pay taxes for the five years. Tax incentives alloted for infrastructure projects will result in decrease in prices. The demand for affordable homes is likely to increase given the extra cash people will have in hand due to proposed deduction of the income tax rate to 5% for taxpayers earning less than Rs 5 Lakh.

Carpet area will be counted instead of built-up area:

The biggest change under the budget was inclusion of carpet area, instead of built-up area. Carpet area of 30 sq meters limit will apply in case of municipal limits of metropolitan cities, while 60 sq meters will be the limit for the rest of the countries. This will ensure spacious home. The carpet area rule is likely to impact under construction projects to meet the afford-ability criteria.

Interest subvention:

Under Prime Minister Awas Yojana (PMAY), the government will provide the interest subvention of 4% and 3% on loans up to Rs. 9-12 lakhs. This is said to provide good boost to mass housing in all eight metro cities across the country.

Affordable housing has caught the attention of many private equity funds and it is also getting inquiries from overseas investors, even before the announcement of union budget 2017. it is also expected that equity funds and foreign investors would increase their stakes in the real estate sector. In short, the budget has got positive measures for developers, consumers and investors.

Three Basic Sales Tips for Property Developers

Investing in real estate business is a great risk for any businessman because it can affect anyone’s financial status for the rest of their lives. A huge amount of money is at stake, and there is a very little room for errors. Wise decision-making and full on determination are the keys to success in this kind of business endeavor.

As real estate or property developers, one must be able to communicate his ideas and express his creativity through project proposals and presentations. A good property portfolio can provide a stable structure for gaining the clients’ trusts and may be beneficial for the company itself for the years to come.

To be a successful property developer, here are some basic sales tips on how to maximize your opportunity in the property development category.

Find the Right Location

The most important thing to consider in every property development is the location. You have to remember that the best location is where you can make tons of profit. It doesn’t necessarily have to be in areas with the nicest postcodes. The ability to buy properties in the worst possible locations and turning them into impressive locality can make any real estate developer successful in this field. A good property developer should possess a keen eye in spotting highly profitable locations to develop.

Provide an Impressive Portfolio

It really pays to be creative. Every real estate or property developer should have a presentable and informative project portfolio that will showcase the company’s mission and vision in a particular location. The portfolio should communicate the ideas and the proposed future appearance of the property to be developed. One way to express creativity in presenting the company’s project proposals is by using 3D rendering and architectural models.

The use of today’s technology, especially 3D rendering, is an ideal way of marketing the proposed future buildings and properties that are yet to be constructed. Having realistic models of the properties being developed can give the clients a clear basis for the calculation of their budgets.

Do Some Research

As with all risky business endeavors, property development could make you rich and famous or could put you in debt for the rest of your life. You have to make things right the first time. A very capital-intensive business such as property development needs thorough study and research. If you want to invest on unusual property locations, you must be willing to take bigger risks. Taking bigger risks could mean greater profit.