Scaling Your Developments - The Only Two Strategies You Need To Know
If you’re new to the world of Property Development, you might have noticed it’s a minefield out there. There are spruikers whose sole job seems to be to create deliberate confusion so that people will sign up for a program or a short course in the hope they’ll be able to work through that confusion and get into the Property Development game.

All too often they part with their money, complete the course and remain confused by the sheer number of potential strategies for turning a profit.

The reality is you’ve got a much better chance of succeeding if you pick just one strategy that can be scaled up. Most people don’t scale. Most people just ‘dart around’ – they do a renovation, then they build a granny flat, then they work on a DA for a four-pack of townhouses. Now back to another reno and then they buy a boarding house. Basically they jump around everywhere, and it’s probably where I see the biggest failures!

Because while there are dozens of different development strategies out there – strategies that can turn a very nice profit – there are really only two strategies that can scale effectively. And by scaling you develop expertise. When you’re an expert, it’s much easier to make money from developing and to work towards financial freedom.

So what are those two strategies?
I’m talking about Subdivision and Multi-Residential.

That’s right, instead of trying to choose from an entire smorgasboard of strategies, we’ve narrowed it down to just two, very scalable development strategies.

What we want to see you do is choose one of these strategies and stick with it for the long haul.

Start small and begin to build that muscle. Take the lessons you learn from your first project and apply them to your second project, which should be incrementally bigger.

The path to financial freedom should be much simpler if there are just two options to consider, rather than 102. And there are some key questions you can ask yourself to help you decide between these two strategies.
How much time can you wait until payday?

It’s important to be realistic about timelines. Generally speaking, you’ll need at least nine months to complete a Subdivision and around two years to complete a Townhouse project – longer if the project is really big.

So if you can’t wait two years until you collect a profit, then you probably can’t do a Townhouse project and take it through the stages of design, construction and sales. But if Townhouse development is what you really want to do, you might be able to do that on a smaller scale by taking on a Townhouse project where you exit after securing DA approval.

The bottom line?

If you’re looking for a development strategy that takes the least amount of time, small-scale Subdivision is your best bet. If time is no issue, Townhouses could be a viable option.

What’s your appetite for risk?

A lot of first-time Developers are discouraged by the complexity of the deal.

There’s nothing unusual about feeling frightened or overwhelmed when you’re learning a new skill. And that fear can be multiplied when you’ve got money on the line.

If you’re paddling this boat, then it’s just a case of taking on the simplest project, which is typically a small-scale subdivision. You don’t have to build anything, which means you don’t have to finance that build.

The bottom line?

If your appetite for risk is small, start with small-scale Subdivision. If you have a high tolerance for risk, you could consider building townhouses.

What about money?

Perhaps you have a healthy appetite for risk but you don’t think you can find the money you’ll need to run the deal. Finance is obviously a major hurdle for new Developers and while there are lots of ways to get creative with financing, from vendor financing to teaming up with a money partner, ultimately your financial situation will go some way towards dictating what you can and can’t do.

The bottom line?

If you can’t pull together enough money to construct Townhouses, you’ll need to stick with Subdivisions or DA-approved sites. If money is no issue, Townhouses could be your ideal strategy.
Can you be flexible with your exit strategy?

No one has a crystal ball so it can be tricky to predict just how well a deal will pan out. So it’s great to have multiple exit strategies. The more flexible you can be, the easier it will be to get the ball rolling on your first deal.

For example, you can buy a block, subdivide it and then exit the deal by selling the land. You can subdivide, get a DA for two new dwellings, then exit by selling the DA-approved land. Or you can get the DA, build the dwellings and then exit by selling the completed homes.
The bottom line?

Your level of flexibility on exit will help to determine which strategy is best for you.

Summing it up...

You can probably see how the answers to the questions above will start to direct you towards the right strategy for your circumstances. Ask the questions and see where the answers intersect. It’ll put you in a much better position to move forward compared to signing up with the majority of property spruikers out there.

I’ve seen so many examples of people joining our ranks from other networks and they’re just so confused. The process of becoming a Property Developer has been needlessly complicated by providing too many options.

We’re all familiar with the saying “jack of all trades and master of none”.

Well, when it comes to Property Development, it pays to master a single strategy.

I like to think of a simple metaphor.

If you’re doing one strategy, it’s a lot like doing weights on only one arm. You start with 5kg, then work your way up to 10kg and over time you’re getting strong enough to do 20kg. You’ve worked hard and now that arm can do a lot of heavy lifting.

But what happens if you’ve been doing all of that work on that one arm and then you use the other arm to try and lift 20kg? There’s a good chance you’ll tear a muscle or drop a weight on your toes.

You really need to go back to that 5kg weight and build up your strength over time.

It’s the same with your development strategy. If you’ve been gradually building up your expertise in Subdivisions, moving from a one-into-two Subdivision, to a one-into-five, then a one-into-10, throwing a 10-pack of Townhouses into the mix could really spell disaster.

You’re not ready for that, you don’t have the skills, you need to go back to that 5kg weight – a two-pack or three-pack of townhouses – and work your way up to bigger projects.

If you like the idea of choosing from just two, scaleable development strategies, and you want to learn more, the stay tuned to future Property Pulse articles as I share more details!
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