Building a multi-unit development may seem daunting to inexperienced investors, however it doesn’t have to be. If you want to get involved with a development larger than a dual occupancy or duplex project, but you lack experience and/or finance, then forming a property syndicate along with finding the right builder might be your ideal solution.
Step 1. Find the right partners
A property syndicate is a long-term relationship, so it is critical to have members who have similar investment goals. It also helps if they have a similar relationship with money. For this reason, many property syndicates are formed between friends, family or close associates so that each member has a good idea of how each other works and most importantly if they can trust them.
Step 2. Finance, investment and property strategy
For your first multi-unit development syndicate may look to secure land in an inner-city area such as Newcastle or a sought-after holiday destination like Port Stephens – both have a high demand for quality rental units. Wherever you choose to invest, it is really about finding the right balance of land price, availability and rental demand.
By determining the ‘where’, your syndicate will be able to form a clearer idea of the individual investment required by its members, so you can then formalise a financial strategy. A well thought out financial strategy will give your multi-unit development the best chance of success. Your strategy should consider rent, capital gains, expenses such as stamp duty and land tax, as well as ongoing costs like maintenance and property management.
Step 3. Get it all in a signed, legal contract
Although you may know and trust the members of your property syndicate, there will be large sums of money at stake and situations may change over the course of the investment (5 to 10 years). With a contract in place your multi-unit investment strategies should be able to stand the test of time and so too will relationships between syndicate members.
Step 4. Engage with an experienced builder of multi-unit developments
The construction of a multi-unit development is slightly more complicated than a dual occupancy or duplex development, i.e. more dwellings mean a host of additional planning, approval and building requirements. Working with an experienced, professional builder may prove invaluable for the inexperienced developer. Reputable builders will handle feasibility reports, concept design, pre-development negotiations, subsequent approvals and scheduled construction all as part of their standard service.
If you want to find out more about building a multi-unit development, Jones Homes’ Development Team has the experience, skills and packages to suit a host of investment scenarios – simply talk to our team.