Real Estate Development – Why You Shouldn’t Search For Great Property Development Sites

We have seen so many beginning property developers go badly wrong at the very first step.

Before scouring the real estate listings to find large blocks of land for sale, there is a crucial first step. If you jump into buying a site without taking this crucial first step, you are taking a huge risk.

You see, there is no way that you can be an expert in every part of your city or state. Yet, to be truly successful as a real estate developer, you must become an expert in the area in which you develop.

Each local council is different. Each area has different public transport provision, traffic bottlenecks, noise pollution issues, local resident action groups, and any one of a dozen other differences – and all these differences are vital factors in your development site viability calculation.

We advise that you don’t begin by searching for sites – but rather begin by selecting one or two area’s in which you will specialize.

When we’re looking for an area, we’re after “a desirable location with consistently good growth”. In other words, we’re after an area that historically has had a minimum annual average growth of at least 10%.

The growth of an area is normally associated with supply and demand more commonly known as the “scarcity” factor. But that’s by no means the end of the story. We have identified over 30 ‘Factors That Can Influence Real Estate Capital Growth’ – here are just some that we consider:

– consistent median house price increases

– positive population growth

– high socio-economic suburbs

– high percentage of homeowners

– low unemployment

– good transport links

Once we’ve identified an area we undertake a detailed market analysis of the neighbourhood using our ‘RED Local Market Feasibility Checklist’. Here are just some of the things we assess:

– demographics: Who is our market and what do they want?

– facilities: Are there schools, transport, shopping centres, hospitals, etc?

– gentrification: Is the suburb in transition, are people moving into the area, are people renovating, is there a cafĂ© society, is it a beach suburb etc?

– infrastructure: Are there plans for new infrastructure like bypasses, new roads, new bridges, shopping centers or is council undertaking beautification?

Finally, we identify what the town planning regulations allow. Possibly even speaking to the local council planners directly – in our experience most council staff are very willing to help.

Never overlook the importance of proper research because it helps you to determine what type of dwelling is in high demand in a particular area, for example if you should be concentrating on townhouses or boutique apartment developments.

Once you have selected two or three locations which look good on paper, get familiar with the areas by driving around the suburbs, checking out what other developers are building, and then talking to a few Real Estate Agents and Property Managers. If possible, you should also attend property auctions. You want to get a feeling for what’s possible, and the demand in the area.

Only when you are completely satisfied that an area stacks up, in the statistics, the ease of doing business, and in the general atmosphere, should you start the process of looking at individual development sites to purchase.

Don’t get distracted by the “Bright Shiny Object” – the apparently brilliant bargain buy in an area you haven’t researched. You have no idea what problems you may be buying into! Stick with the area you know, and know well, and you will have a lower-risk real estate development experience.

Real Estate Development – How to Choose a Site With Great Development Potential!

We can’t tell you the number of times we’ve seen inexperienced property developers rush in and buy a development site because it looks like a great opportunity, only to find themselves struggling, and regretting their decision, further down the track.

We believe that it’s essential to perform proper due diligence and a thorough site evaluation before making an irreversible commitment to acquire a site, preferably using a checklist.

When we’re satisfied we’re able to develop a site and we’re happy with our initial ‘back of envelope’ calculations, we don’t immediately acquire the site. Instead, we come up with an initial concept. This is where we do some rough sketch layouts (we may even come up with a number of different options), using the Local Authority Planning Codes and Policies.

In most situations, depending on the local authority planning codes, the area of the proposed building will be based on the land remaining after allowing for required boundary setbacks, car parking and maneuvering and open garden landscaped space.

This, together with the preferred unit size (determined through our initial Marketing Research) will indicate the number of units that can be accommodated on the site. To get the maximum benefit out of a site, a competent and experienced architect should be engaged to create these initial concepts.

As we haven’t gained control of the site yet, we can still back out of the deal. We prefer to quickly prepare schematic drawings to determine the true potential of a particular site. Because if we don’t, we’re just gambling with usually very high stakes.

As soon as the concept drawings are finished, we fine-tune our ‘number crunching’ by undertaking a proper financial feasibility study. The purpose of a feasibility study is to establish whether a project is a viable proposition or not.

If the concept doesn’t pan out, we consider the time and effort we’ve put in to be our “insurance premium”, which has just saved us possibly tens or even hundreds of thousands of dollars, and untold stress, by helping us to avoid a problem site.

We use “Feastudy” property development feasibility software that allows us to work backwards to evaluate what the land is worth to us with development approval – this is called the Residual Land Value. This number is very important in calculating what we would be willing to pay to acquire the property.

We use Worst Case scenarios to do our calculations, which means we are conservative in the values that we input. We include anticipated time scales, all costs including consultants and construction costs, as well as likely end sale values, our minimum profit margin, plus a contingency allowance (depending on circumstances especially site conditions).

It is critical that this feasibility calculation is performed correctly.

If we try to develop a site which is not actually feasible, we are setting ourselves up for stress, disappointment, and possibly even large financial losses.

The feasibility study is also invaluable when putting together a JV or Loan Application Proposal as mortgage lenders or other investors can instantly see whether our project will be successful and the level of risk involved.

A lender will only fund a project which can be demonstrated to be financially feasible – however, if we are funding the development ourselves, we need to be just as certain that the numbers stack up.

So many newbie real estate developers miss out the detailed feasibility step, and the really sad result is that they end up suffering, emotionally and financially, and often give up on real estate development completely because they conclude that it “doesn’t work”.

We know that it does work. But only when the detailed feasibility study says it will work. Anything else is simply guesswork and high-stakes gambling. You may get lucky, but the reality is, you could also end up losing your shirt.

Home Interior Design Plans For the Elderly Person’s Bed Sit

Having an elderly relative living in your home can often benefit the whole family. The cost of professional care is becoming beyond the reach of many and, for the older person, living with an extended family can provide continued interest, security and the best possible care. The accommodation of an older family member within the home, it has to be admitted, is potentially fraught, but with some thought and patient planning it shouldn’t be too disruptive.

Home Interior Design Tips For Elderly People

The room you choose for the older person will, ideally, be at ground level so as to minimize difficult journeys and should if possible allow space for more than just sleeping. If it also has a large window with an interesting view, this should make your decision easy. The provision of areas for relaxing, bathing, cooking and dining will allow the senior citizen to remain active and somewhat independent from the rest of the household – a situation that is likely to suit both parties.

Dividing these areas of activity (by employing screens, curtains or items of furniture) is important for the occupant so that he/she can appreciate the changes in his/her day and can entertain without private areas being on view.

Designing a room or bed-sit for an older person is best achieved by placing yourself in that person’s shoes and by thinking through how to compensate for the possible limitations imposed upon their lifestyle. You don’t want to be too pessimistic, but it also pays to plan for days when the person’s capacities could be reduced. Some of the more obvious provisions are:

  • A comfortable, easy access chair for the room occupant and seating for guests.
  • Bright lighting to help cope with failing sight. Wall and ceiling-fixed lights plus well-weighted table and floor-standing lamps are suitable. A switch by the bedside is helpful, as is a low-wattage light that can be left on overnight. Remember to highlight any changes in floor level. Perhaps also consider positioning sockets and switches nearer to hand height.
  • Warmth – older people generally like (and need) warmer room temperatures than the young. Central heating radiators and open fires need to be easily accessed and controlled and suitably guarded.
  • Storage at an easily accessed level and with openings that are not too difficult to operate.
  • The elimination of all sharp comers for safety reasons, and the removal of any electrical cables that could be tripped over. A smoke alarm is another wise precaution.
  • In the bathroom, it’s a good idea to install grab rails around the bath and/or shower and perhaps a lockable mirrored wall cabinet. You might also like to consider fitting an ‘engaged’ door sign rather than a lock. Mixer taps and an electric temperature controlled shower will help better manange water temperature.
  • Curtains on a corded track, operated from the side, to ease opening and closing.
  • Non-slip floor covering and well-attached loose coverings. A fitted carpet of the type that can be easily cleaned is ideal.

The decoration of the room in a familiar style (most likely to be traditional) and the incorporation of existing possessions will help to make the elderly person feel quickly at home. Inviting them to make decoration choices will involve them further. Pretty patterns and cheerful colors will do much to lift their mood and the addition of plants and even a pet will bring life to the room.

In addition certain electrical gadgets, such as remote control for lights and curtains, could well smooth the life of an elderly person.