Developers
Strategic advice and big picture planning for builder developers
It takes confidence and careful planning to achieve a good result in property development. But to have a successful property development business requires sophisticated modelling, repeatable processes and an investment-worthy vision.
At Tenfold our business coaches understand the value of development projects you can take to the bank. We use long-range planning to give developers a clear vision of a future roadmap for continued success.
Discover what’s possible with a property development business coach at Tenfold…
Multiplying the value of your commercial acumen
Business coaches who understand builder developers.
We know where you’ve come from
Builder developers have usually been in the industry for many years, often starting in the custom home sector before seeing the opportunity to move into multi res developments. With a keen eye for numbers and good commercial acumen, they recognise the financial benefits of being a developer as well as a builder.
We know what makes a good builder developer
Good operators in the builder developer sector are strong on financials, feasibility, estimates, and determining rate of return on projects. They calculate the compound annual growth rate of the funds that have been invested in the project in assessing a build opportunity.
We know the investment involved
Some builder developers use their own business and personal balance sheet to fund the projects, while others involve external investors and joint venture partnerships. Due to the high values of these builds, they need to understand the complexities of smart debt leveraging. Builder developers who have multiple projects in progress often use funding from different financial institutions based on the type of projects and delivery timeframes they are working on.
Benefits of transitioning from custom builder to builder developer
Maximising financial rewards and simplifying project management
There are several compelling reasons to move from being a custom builder to a builder developer. Firstly, there are greater financial rewards when developments are done well. Less effort is required in marketing and sales functions, as you have more control of your pipeline of work.
Similarly, the roles of customer service and communications becomes a lot simpler when the client is your JV partner, or even simply yourself.
Being a builder developer cuts the complexity that custom builders face when dealing with homeowners. With custom build projects, the relationship between builder and homeowner is an uneven one. Builders are often forced to pander to clients; clients who can’t make decisions, who change their mind during the building process, and clients who select architecturally brilliant but difficult to install appliances, fittings and hardware.
If you’re a custom builder looking to move more into developments, talk with a coach at Tenfold about the next stage.
Strategies for diverse development objectives
Agile plans to suit your specialist development niche
Development opportunities vary across the market, from residential to commercial projects. Some property developer builders focus on multi-res builds from smaller scale 2-unit dual occupancy homes to larger sites with 3-units up to 8-unit developments.
Some find their competitive advantage in semi-commercial projects such as childcare centres, medical centres, and small retail and mixed-use developments. Other builder developers prefer to specialise industrial developments with small factories and factoriettes including storage facilities.
The investment objective of the project can also vary; some developers prefer to build and sell while others undertake projects to hold for the medium to long term. Many builder developers choose mix of both sell and hold to take advantage of various tax benefits.
This mixed portfolio model allows builder developers to free up equity as required based on other projects’ time frames and new opportunities.
Maximising margins in builder development projects
Achieving margins and navigating tax implications
In all types of building projects, whether custom home build, renovation and extensions or commercial, we need to ensure solid margin is achieved.
The difference when we coach builder developers is that we need to ensure that you make builders margin AND also make a developer’s margin.
To an outsider it may sound like an easy double dip but those with experience know better. The reward of developer’s margin is earned through smarts and effort.
Because of their own investment in the project, a builder developer must know all the different taxes and tax situations that occur during the development process. This includes having a thorough understand of GST implications for developments, CGT considerations, timing of land tax assessments and stamp duty implications.
The cost of money and lost time can be high if it the tax factors are not managed well. There are many ways to minimise tax if you get your sequencing and timeframes correct. It requires forward planning, and coaching can a provide a structured approach to managing this part of a developer’s business.
Strategic site selection and planning for builder developers
Using intel of property market cycles, site viability and approvals to back long-range plans.
The property market is always an underlying factor of the economy. In particular, builder developers need to be aware of the property cycles, and keep an eye on lead indicators.
As a business coaching firm we look at long-range lead indicators, using this kind of market intel to enable strategic decision making.
Builder developers need to monitor property cycles wisely to avoiding buying at the top of a hot market, and at other times needing to sell at lower values as markets cool.
Savvy builder developers understand the need to buy development sites well. This requires thorough due diligence on the potential site. A factor that is often overlooked but is crucial for assessing site viability is understanding the specific attitude of the planning department of the local council for the development of that pocket of a suburb.
From a site logistics perspective, developer builders must be aware of the various overlays. They must also understand water infrastructure and telecommunications installations and how these might impact any changes required to the site and therefore the costs of the project.
Feasibility assessment and strategic decision-making for builder developers
Managing contingencies, delays, and site selection through financial models
Through feasibility is important for these projects allowances needs to be made of building contingencies, planning and construction delays. Project plans should expect the unexpected, such as dealing with RFI and delays due to disputes that are escalated to a civil administrative tribunal (VCAT, NCAT, QCAT, SACAT, SATWA, ACAT).
Tenfold business coaching supports builder developers by assessing feasibility through multi-scenario ”what if” analyses: best case, worst case, likely case.
The road to a successful development project requires agility of timing; the right sites aren’t always available at the right time. It’s common for a builder developer to look at many sites before procuring one. As business coaches for builder developers, we use financial models for assessing sites and projects.
We get the model right to enable data-backed decisions.
Professional development company approach for builder developers
Accountability, risk management, and investor evaluation
The downside to running only your own projects is a lack of accountability, without the targets and performance benchmarks of a normal business. We coach clients to run as a professional development company with budgets, plans, success metrics and long term goals.
While many people make lots of money doing developments, there are also many builders who are casualties because they don’t do it properly.
As experienced business coaches we know that there is no room for short cuts when developing. Every little item counts, and all decisions need to be considered from a risk management viewpoint.
In considering financing, there are several models to consider including JV partners, private investors and property syndicates. The appeal of leveraging someone else’s money can be high but it’s prudent to consider who you’re getting in bed with financially.
Tenfold Business Coaching uses a customised framework to assess the investor options and evaluate the best fit for you and your business.
Speak with a business coach at Tenfold to understand how coaching can work for your property developer business.
