PROPERTY INVESTMENT

The Difference Between Property Development And Property Investment

April 29 2014
plastic houses

What’s the difference between Property Development and Property Investment from a building point of view?

The team from Ventura iD – the only dedicated Property Development brand in Perth, talks about the difference between investing and developing.

About Investment Properties:

A 'Turnkey' Property Investment - Design by Ventura iD Western Australia

A ‘Turnkey’ Property Investment – Design by Ventura iD Western Australia

Generally, most investment builds are one dwelling, built on a single survey strata or a green title property.

Most people who build an investment property are looking at a longer term commitment between 5-10 years, and are building for wealth creation and/or tax minimisation.

The key when considering an investment build is the balance between a property that will increase in value and functions well as a rental to maximise rental yield.

The design and the area you choose to build an investment property are extremely important, as they both will impact your rental income and your potential property growth. You do not want to under or over capitalise the build, and you also want to ensure the level of finish is also suitable for the area you are building in. It is therefore imperative that you talk with a professional sales consultant who works with investors on a day-to-day basis.

Sure, its OK to look at display homes to get ideas, but display homes are designed and finished for families to live in…not an example of an investment property.

About Property Development:

Property Development in Perth's suburbs.

Property Development in Perth’s suburbs.

A developer is somebody who takes a parcel of land and builds multiple dwellings on the same title. The amount of dwellings you can build on one title depends on the zoning of the land – called the R-Codes. The shape of the land and the status of title can alter the number of dwellings you build.

The R-codes dictate the density of the land by outlining the size requirements of each strata or green title lot. You work out the number of dwellings that can be built by dividing the maximum area as per the R-code into the size of the land.

One of the biggest issues inexperienced developers face, is when they work out the number of dwellings using the R-Codes formula, the shape and topography of the land may not allow the same number of dwellings to be built. This can have a massive negative impact when you are doing your feasibility.

The skill set and experience required by the Builder and the Sales consultant to assist you in developing your unit site is quite different to the skill set required for building a single house.  So do your homework and ensure that both the builder and the sales person are experts in this area so that you’re not part of the learning curve.

To learn more about property development and investing, contact the team at Ventura iD for a free consultation. 

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