What kind of property development suits you?

Dominique Grubisa
Dominique Grubisa

Published 6:57 am 26 Oct 2018

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Does your property development career lie in lining up deals for builders? In subdivision? Or in creating large residential complexes? DG Institute Founder and CEO Dominique Grubisa explains the different approaches.

If you’re relatively new to the field, you might assume all property developers do more or less the same thing. They buy property, add value, and then sell for a profit. While in essence that’s true, there are a range of different ways in which this can be done. Some developers never get involved in the construction process preferring to bring projects together for others to build. Others see projects through from the initial vision to selling units to customers.

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Types Of Property Development

Check out the three broad categories of residential property development below. Examine the differences and try to work which might suit your skill set best.

DA Uplift

Turning a block of land into return on investment doesn’t have to take years waiting for the property cycle to reach its peak. With a little paperwork, a bare block can provide you with a simple and easy windfall without having to swing a hammer or hire a builder.

Builders need ongoing projects to keep their workers employed and are on the constant lookout for ready-to-build sites to save time and holding costs. If you have vacant land, you may be able to turn a profit by obtaining a development approval (DA) and on-selling it to someone who wants to take on the hard labour of bringing a vision to fruition.

DA Uplift is like pimping your block – adding a bit of bling to an otherwise blank slate by taking care of some of the more mundane paperwork councils require to get a development off the ground. It’s seen as desirable by some developers because the construction route can be full of risk. If you do develop, you’re subject to market forces or you may run out of money. The potential profit from a DA Uplift is less, but then the risk is much lower, too.

Subdivision Development

Subdivision is another effective way of generating profit and, like DA Uplift, you are not obliged to get involved in the construction process if you don’t want to.

Subdivision involves taking a large block of land, taking into account the requirement of the local council in terms of block size and zoning requirements, and dividing the land up into smaller parcels of land. When you subdivide one property into many, you can add significant value in the process. You then have the option to hold the lots and wait for more uplift, build on the vacant lots and/or sell one of the properties to pay down your debt and increase your equity and rental yields. This approach is simple and low risk when you understand the process and what to look out for.

There are two main approaches to residential subdivision: demolish and build, and retain and build. There are many benefits to just demolishing and subdividing including a potentially much quicker sale, not having the stress of having to go through the construction process as well as increased flexibility in the way in which the land is eventually used. If you take the option of retaining an existing building and just subdividing the remaining block, you generate a profit without the extra building costs. If you do decide to subdivide, discuss the advantages and disadvantages of all options with a professional who understands all the complexities of these types of projects.

Residential Unit Development

Residential unit development has a potentially lower financial requirement compared to commercial, industrial or retail development. Many residential unit developers sell some of their units after completion to pay down their debt, effectively allowing them to own the remaining units outright.  You can repeat this process to acquire several million dollars in property and hundreds of thousands in positive cash flow to effectively retire on.

However, there are many pitfalls to watch for with this type of development particularly if you don’t have a lot of experience behind you. It can be a mistake to take on too much too soon. Supply and demand can determine price, so an increased supply can cause prices to go down.  If there are many new dwellings being built in an area, all due to be completed within a similar time frame, there could be an oversupply which would mean the final sale price would be below expectations. If you’re a first-time property developer taking on a multi-residential development, don’t overstretch your finances or over-estimate your experience. Rather than build a five-storey apartment block, try something more modest. A mistake on a four-apartment development will be easier to manage than one on a 20-apartment development.

Property Development Webinar Briefing

Good Debt Vs Bad Debt With Dominique Grubisa - DG Institute

Lawyer, Asset Protection Specialist and Property Educator

Dominique Grubisa is a practicing lawyer with over 25 years experience. She is a property investor and developer, an entrepreneur with businesses in Australia and Southeast Asia, a speaker, educator, writer and published author.

This column has been written for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such.

About DG Institute

Founded in 2009, DG Institute strives to empower everyday Australians to grow and protect their wealth. Our goal is to provide direction, motivation and inspiration to our clients and help them perform at their very best. We do that through our professional services, in addition to teaching them how to grow their wealth through property and business education.

This column has been written for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such.

Our Happy Clients

  • Lisa Mitchell

    "My name’s Lisa Mitchell. I live in Chatswood in Sydney. Since joining the Elite Mentoring Program. I’ve done two deals made around $240,000. And probably when I add the extra rental that’s coming, it’s another $70,000. I could not be happier with that result. And I’m amazed by it, to be honest, I’m absolutely amazed. […]"

    Lisa Mitchell, Property Uplift Elite Mentoring Graduate

  • Jennine Kimbal

    "Janine Kimball from Newcastle since joining DG Institute we have two projects currently in progress with a gross realization value of about 10 and a half million dollars expected profit from those is going to be probably around $1.8 million when they complete the reason we joined DG Institute and the Elite Mentoring Program, was […]"

    Jennine Kimbal, Property Uplift Elite Mentoring Graduate

  • Michael Kuligowski

    "Hi, my name’s Michael, and I’m from New South Wales. Since joining the Elite Mentoring, we’ve been able to secure three properties. Well, under market value, both in inner Sydney, New South Wales, also regional new South Wales and one in Victoria by, undertaking, this program, we’ve definitely benefited, and we can see that we’re […]"

    Michael Kuligowski, Elite Mentoring Graduate (Property Uplift & Real Estate Rescue)

  • Sharon Harvey

    "Hi, I’m Sharon Harvey. I’m from South Australia. I joined the Elite Program because I was looking for something more in property and I was looking for more education and somebody who would inspire me and Dominique was that person. I listened to her talk and realize that there was a great synergy between us. […]"

    Sharon Harvey, Property Uplift Elite Mentoring Graduate

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