Are you interested in learning how multi townhouse builders or property developers make their money?
In this article, we will explain the nine main traits and strategies that townhouse developers have and use.
There is a difference between a builder and a developer, though. A builder looks after the construction of the homes. But a developer is the project manager of the whole process. From start to finish, they manage all the aspects of a successful development.
So, let’s get right into those traits and strategies.
Don’t get Attached or Emotional
Buying a block of land for property development is a lot different from buying a home to live in. When you look for homes to live in, you become emotionally invested and attached. This is because you want to picture yourself living in the house. Raising a family there and hosting gatherings.
In property development, you cannot afford this sentimentality. A property developer looks at a site as potential profit. A successful property developer knows not to get attached to a particular site.
A top developer also knows to separate their emotions from their work. This is a game where the stakes are high. Those who are cool, collected and calm emerge on top.
If you tend to get emotional or hot-headed, you’ll need to learn to reign this in if you want to be a property developer.
They Can Make Money in Any Market
The property market is like any market. There are fluctuations, variations, dips and peaks.
Although real estate is typically an appreciating asset, there have been housing market crashes in the past. Just look at the global financial crisis a few short years ago.
Now, some say that you need to buy low and sell high. Or that it’s not worth launching a development in a slow or depressed market.
A top townhouse developer can make money in any market. This is because, for them, it is a full-time job. There is no timing the market; it’s just about locking down the process. They keep working despite the market fluctuations.
Their Numbers and Figures are Airtight
Now multi-unit development is a high risk, high rewards project. The stakes are high, but if everything is done correctly, there is a potentially significant profit on the table.
Successful developers don’t guess and estimate. They don’t take a “She’ll be right” attitude when it comes to their numbers.
A developer on the top of their game runs the numbers and reruns them. Then, they run them yet again, to be certain. Their calculations are airtight. They rely on the facts and the figures and don’t shoot from the hip.
Also, a miscalculation or an error of judgement can lead to massive delays. This can result in a lost profit or even project failure and bankruptcy.
They Have Strong Project Management Skills
A development project is essentially a project like any other. However, the particulars are focused on building multiple dwellings on one block of land. But like other projects, it all comes down to management.
A top townhouse developer is also a gun project manager. They have the knowledge, skills and experience required to undertake a successful project.
Moreover, this means they have strong people skills. As well as an exceptional eye for detail. They work to a tight deadline and are systematic and practical.
A real estate development project can take a year or more to finish, and each day of that year needs a firm pilot.
This is why successful townhouse developers have excellent project management skills.
They Can Identify the Right Site
Now, not every large block of land in a city is perfect for development.
There are so many variables to consider when it comes to choosing a perfect site.
Some sites may appear great but have underlying issues. These might be tricky easements, or the wrong orientation or zoning restrictions.
A top townhouse developer can study a site and consider it from every angle. They only pull the trigger if they’re certain.
Remember our tip above about not getting emotionally attached to a site? This is important here too. A savvy developer considers a potential site from a distance, remaining detached.
Only when they’re certain and have looked at it from every angle does a top developer snare a suitable lot.
They Have a Strong Network
It’s like the saying goes: “if you’re not networking, you’re not working.”
A top townhouse developer will have a solid network of professionals to tap into. From real estate sales agents to conveyancers and surveyors. Also, marketing agencies, architects, designers, builders, town planners and more.
In addition to a strong network, one of the keys to a successful development project is coordinating all the different players. Hence the trait we shared earlier about being gun project managers.
A feasibility or feasibility study is an assessment of the practicality of a project. In property development, it’s a document that shows that you have planned out a townhouse or unit project.
A top developer will know how to create a top-notch feasibility. This is important because a lender will want evidence of feasibility. They ask for this before loaning a developer money for a project.
They Do Their Due Diligence
Due diligence is another term for all the background checks, works and preparations when getting ready to do a project.
Take for example, a property developer preparing to enter into a joint venture partnership with another developer. They would want to make sure the other party can uphold their end.
This would mean obtaining proofs and evidence of the other parties financial and legal standings.
Due diligence is also a term for all the required checks and research before purchasing a property.
A successful property developer does their due diligence.
Know the Market
A top property developer knows the market, inside and out.
They have a sense of what is selling and for what.
When it comes to pricing a property for sale, they know the market value range.
Successful developers also know what buyers are looking for. They also know what the latest design and building trends are.
In this article, we’ve covered the top 9 traits and strategies top townhouse developers use in their work.
About the Author
Peter Kelly is a co-founder at Little Fish Property Developments, where he the senior development project manager. Peter Kelly is enthusiastic about real estate with 10+ year’s experience as a residential property developer in Melbourne, Australia.