The media is currently full of real estate ‘doom and gloom’ – real estate repossessions and arrears are up, and real estate prices are down … it is almost as if the ‘sky is about to fall’! This situation has seen many real estate developers and property investors generally leave the market – and for those thinking of starting in real estate development, these are scary times indeed.
What seems like the worst time to get into real estate development can, in reality, be the best time. Successful real estate developers today realize that they can use the time to their advantage – their real estate development projects will typically not be ready for sale or rent for 2 to 4 years from inception. So, if they have bought well, they are less likely to be affected by the economic situation when purchasing their real estate development site.
A weak market is a real estate developer’s paradise because a weak market is a buyer’s market, and one of the first steps to any real estate development project is securing a viable real estate development site on the best possible terms.
Although we know that the real estate development business is cyclical and many parts of the world are in a property downturn, we also know from history that knowledgeable real estate developers are successful in any market – falling, flat, or rising.
We’re working towards what we believe the economic conditions will be in 12 to 36 months. Indeed, we are still active in the market – seeking Council permission for several real estate development projects. This lets us act quickly and build our approved real estate development projects when the market becomes buoyant Unique Press.
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It is our opinion that the following market signals are some of the key factors that will lead to increased future opportunities, especially for real estate developers:
· The pent-up demand for housing. In March 2008, leading Australian economics forecaster BIS Shrapnel chief economist Dr. Frank Gelber argued that housing prices across Australia would rise 30% to 40% over the next five years because of the built-up housing shortages.
· The current Federal Government has stated that they will increase Housing Affordability and have begun to announce incentives, including Tax Credits of $6000 per year if the housing is rented at 20% below market rent.
· We believe that an increasing number of people will likely require the rental accommodation we intend to build in the short to medium term. This is due to their financial stress (inability to afford a home) and demographic trends (including Gen-Ys who are less likely to buy Real Estate).
Even if our ‘crystal ball’ is incorrect, we know we have the resources to hold real estate development sites during possible further market fluctuations, and increasing rents are certainly helping with that!
We believe this is a golden time to act – perhaps a once-in-a-generation opportunity. Maybe it is not the time to sell completed real estate development projects. Still, securing the development site and obtaining development planning approval is certainly a great opportunity. This strategy is not for everyone – you must have the necessary resources to hold the development site and especially the knowledge of real estate development to take advantage of these opportunities.
The best approach for anyone contemplating real estate development depends on their personal and financial circumstances. Still, the key message here is that you must do something!
There are many strategies that small real estate developers are currently using if they don’t have the resources to complete a real estate development project right now, including turning their real estate knowledge into cash by locating ideal property development sites, perhaps taking out an option on the site and on-selling the ‘Development Permit Approval’ to someone who does have the resources.
Successful real estate developers know that times of opportunity like this only come along once in a while, and they’re taking action so they don’t miss the boat.
Regardless of your immediate financial situation, this is the perfect time to leverage your real estate development knowledge into current or future income. If you have doubts about your ability to do this or would like an experienced real estate development mentor to guide you, act now to get the knowledge and mentoring you need. There is no time to waste!
Adrian Zenere is a Registered Architect and Licensed Home Builder. He and his wife Amber have built a multi-million dollar sustainable property portfolio through Real Estate Development. Together, they run their architectural practice http://www.archizen.com.au specializing in Holistic Architecture, combining eco-sustainable development with feng shui principles and creating a harmonious living that respects our environment. Their projects are regularly featured in the Australian Property Investor, Luxury Home Design, Lifestyle Magazine, Home at Yellow, and several newspapers.
They are also co-founders of the Real Estate Development Club. They use their real estate development knowledge and experience to help real estate investors become successful real estate developers. To look closely at Adrian and Amber’s entire Real Estate Development process and download your FREE REAL ESTATE DEVELOPMENT REPORT and other valuable real estate development resources, visit: http://www.RealEstateDevelopmentClub.com.
