Seven years ago, I was flipping burgers at McDonalds. At the time, the next step in my career was a promotion to the fry station and I wasn’t feeling good about my chances. Fast forward to today and me and the property development company I co-founded – Williams Corporation – is going to build 400 homes in a year.

Every day I get messages and emails from people asking me how they can become a property developer like I did, and my answer is always the same:

“This isn’t a get-rich quick scheme, and it’s definitely not easy, but if you’re truly obsessed and motivated, there is a way to make it happen”.

Buy a section, subdivide and build.

When you start most jobs in New Zealand, there is a three-month trial period. Within that time your employer can get rid of you if you’re rubbish at the job and if you don’t like it you’re free to leave. You can do something sort of similar with property development.

To start your ‘property development trial’, buy a home with a large section, subdivide it and build one or two small houses or townhouses on the back (if you already own a large section, this will be a lot easier and cheaper to do). When you’re done, sell the new properties and either live in the one out front or renovate and sell that too.

You might make $150,000, you might make nothing at all, but you’ll gain an insight into what it’s really like to be a property developer to help you decide whether it’s right for you. You’ll learn about the process firsthand and you’ll find out that even something as simple as cutting a section in half and building on the back is incredibly expensive, time consuming and complex.

To succeed as a property developer you’ll need a good team of pros around you.

Learning how to become a property developer in New Zealand

Throughout your subdivision and build, you’ll learn what it’s like to handle all the problems and challenges that property developers regularly face. That’ll include:

• Selecting a site and purchasing it (always make sure you’re aware of any restrictions on what or how you can build before you purchase land).
• Choosing plans and designs/working with an architect.
• Estimating costs for the project and determining feasibility.
• Getting finance approval for the build.
• Incorporating a company and setting up efficient tax structures for the project.
• Completing the subdivision and connecting services/a driveway to the new section.
• Getting council approval (this can take months and often becomes very expensive!).
• Building the property.
• Dealing with a range of professionals including:
  • Quantity surveyors,
  • Lawyers,
  • Accountants,
  • Construction contractors,
  • Sales agents,
  • Building, electrical and plumbing contractors.

Subdividing and building the property itself is important – of course it is. But the most important part is selling the thing. Once you’re done, you need to select an experienced real estate agent who you trust – someone who gets results consistently and knows how to market your property. You can do everything right during the build – but if you mess up the sale, it’ll all be for nothing.

Learning how to manage a subdivision and build can open a lot of doors.

How much do I need to start as a property developer?

You’re going to need a fair chunk of change in the bank to kick off your first mini property development. Here’s a very rough breakdown to give you an idea:

• Land acquisition: This depends on where you are and what type of land you’re buying. This can cost anything from $100,000 to several million, but obviously if your current home is already on suitable land, you won’t need to buy more.
• Subdivision: $80,000 (Includes lawyer’s fees, quantity surveyor fees, council approval, connecting services and building a driveway).
• Building: $200,000-$250,000 to build a 150 sqm townhouse.
• Extra costs: $20,000.

Your chances of getting the bank to finance your build and land purchase are much better if you’ve got 30% of its total cost in savings ready to go as a deposit. Assuming you’re buying a $500,000 section in Auckland, you’re going to need at least $240,000 in savings ready to go.

You’ll also have to be completely comfortable with the fact that what you’re doing may be risky, and while it’s unlikely that you’ll lose money if you do it right, you might not make much despite all the time and effort you poured in.

Do you reckon you’re ready to create your first property development? I’d love to hear about it if you do and I’m always happy to offer advice if I can. Drop me a message and let me know how you get on.