3 Common Mistakes To Avoid When Planning Your First Melbourne Multi-unit Development
Mistakes to avoid on multi-unit development
By avoiding the following three mistakes you are more likely to achieve your desired return on investment (ROI) on your first Melbourne multi-unit development. Which will make it easier to roll into your second Melbourne dual-occupancy development and continue to grow your wealth.
Here are 3 common mistakes that first-time property developers make and how to avoid them, written by Melbourne townhouse builders with over 40 years of experience.
- Not conducting enough research on your Melbourne townhouse
- Overspending on your Melbourne multi-unit development
- Failing to maximise the land potential of your multi-unit development
Let’s dive into each point.
1. Not conducting enough research on your Melbourne townhouse
Before you purchase a block of land in Melbourne for development or knockdown and rebuild an existing property, we strongly advise conducting thorough research on the ROI potential in that area. Here are a couple of questions to help get you started on your research today:
What is the general property development regulation, legislation, and process in the Melbourne suburb you plan on investing in? Such as Footscray, Cairnlea, or Caroline Springs.
What about population and employment growth, and the economic factors of the Melbourne suburb you are developing in?
Anything that will affect the demand of your Melbourne multi-unit development needs to be researched thoroughly before investing valuable time and money into a unit development such as design limitations, council guidelines, and finance approval trends.
2. Overspending on your Melbourne multi-unit development
Accounting for the many associated costs within a property development project is one major step that should not be avoided. Underestimating costs and spending over budget will greatly affect the success of your multi-unit development in Melbourne.
The best way to understand the many costs involved in property development is to conduct a Feasibility assessment before you begin planning and designing for your block of land.
Your feasibility assessment will include:
Initial costs: Acquisition, Land Deposit, Stamp Duty and Legals, Lenders Mortgage Insurance (LMI) if applicable, Loan Interest Rate, Loan to Value Ratio (LVR), Anticipated Loan Interest (based on a typical overall timeline of 12-24 months), Construction Deposit, Construction Loan Amount, Anticipated Construction Interest (based on a typical build schedule of 6-12 months)
Planning and preliminary costs: Project Potential Review, Town Planning (all documents, applications, and permits), Preliminaries (working drawings, engineering, etc), Construction (building contract and project specification)
Construction costs: Complete cost for each dwelling and GST
Other costs: Council Public Open Space contribution (if applicable), Subdivision fees, Real Estate Agent fees
Your local Melbourne dual occupancy builder will offer free feasibility assessments before commencing your Melbourne townhouse development project.
3. Failing to maximise the land potential of your multi-unit development
The next common mistake we see first-time Melbourne property developers make is building too many multi-units on one block of land. Even though cramming as many units as you can is possible in accordance with regulation and code, it doesn’t mean you are guaranteed a high ROI. In fact, compromising smart design for more units often fails to appeal to a purchaser or prospective tenant. Something we have seen too often with first-time Melbourne developers.
Balance is key when designing a high-end unit development for your block of land. While we recommend being careful not to over-design, we also recommend being aware of under designing. Getting it right takes expertise and skill, so speaking with a reputable multiunit Melbourne builder can save you time, money, and stress in the long term.
As specialist Melbourne townhouse builders who have been developing wealth-generating multi-units for over 40 years, we have seen it all. By beginning with a feasibility assessment, maximising the land potential of your multi-unit, and conducting enough research on your multi-unit before you begin, you are more likely to hit the ROI you desire.
Contact delcon design and construct to engage specialist Melbourne townhouse builders for your first multi-unit development on 1800 335266 or email: info@delcon.net.au
Mistakes to avoid on multi-unit development