18 Jan 2024 Podcast: Guest – Residential & Commercial Property Development 101 with Baz Komak

Posted at 09:28h in Podcast by Evelyn Clark

1 Like

Today we’re joined by Baz Komak, a successful financial planner turned property developer.
Baz shares invaluable insights into both residential and commercial property development. Baz and Evelyn discuss crucial considerations for any project, emphasising the importance of thoroughly assessing profitability and knowing the numbers inside out.

Baz delves into his key learnings and explores the various types of development opportunities, highlighting the importance of having your ‘A’ team around you, and getting correct advice from the get-go.

Whether you’re a seasoned developer or a newcomer to the field, this episode provides actionable advice and strategic perspectives to navigate the intricacies of property development successfully. Tune in and gain valuable knowledge from Baz’s wealth of experience in the financial and property realms.

Find out your next step in property finance:

You Have My Interest is brought to you by Everlend, a mortgage and finance broking firm built for the purpose of educating and empowering you to make informed financial decisions tailored to your wealth goals. Find out more and book in your free initial consultation at
https://www.everlend.com.au/

There’s plenty more great content to come … so make sure you subscribe now on Apple Podcasts or Spotify so you don’t miss a thing.

Get in touch:

Find out more about You Have My Interest at everlend.com.au/podcast and connect with us at podcast@everlend.com.au

You Have My Interest provides information and educational content relating to mortgages, finance and property. You Have My Interest‘s content is general in nature and does not take into account the individual financial, legal or tax needs or objectives of its audience members.

It is not intended as a substitute for professional advice. Listeners should seek out a licensed professional to discuss their individual financial, legal and tax requirements.

If you need mortgage or finance advice tailored to your own personal situation, contact Everlend today for a free consultation. Everlend are authorised credit representatives of Loan Market Pty Ltd, Australian Credit Licence number 390222.

Podcast produced with Apiro

Please find a Podcast summary below with the interview highlights:

Podcast Overview
Evelyn interviews Vaz, an experienced property developer, to provide listeners with insights into property development. The discussion covers Vaz’s journey, the risks and rewards of property development, differences between residential (Resi) and commercial projects, and key considerations for those interested in entering the field.

Key Topics Discussed:

1. Vaz’s Background in Property Development

Transitioned from running a financial planning business to property development full-time in 2020.
Experience spans residential projects (e.g., townhouses, subdivisions) and commercial ventures (e.g., childcare centers, swim schools, and warehouses).

2. Getting Started with Property Development

Land Use and Zoning:
- Understand zoning laws (e.g., General Residential Zone) via tools like VicPlan or by consulting town planners/architects.
- Avoid assumptions about land potential without verifying zoning, covenants, and density allowances.
Council Approval Process:
- Victoria’s process lacks prescriptive density rules, making council approval subjective and often slow.
- Engage professionals familiar with local council preferences.

3. Conducting Feasibility and Risk Assessment

Financial Feasibility:
- Key considerations include site purchase price, build costs, resales, GST (and margin schemes), stamp duty, finance costs, and consultants’ fees.
- Many sites are financially unviable; Vaz rejects 95% of those reviewed.
Contingencies and Timing:
- Timeframes often exceed expectations, especially due to council delays and market conditions.
- Include financial and timeline contingencies to avoid underestimating project duration and costs.

4. Residential (Resi) vs. Commercial Development

Residential Development:
- Popular but increasingly challenging due to high construction costs and tighter profit margins.
- Focus on thorough market research for realistic resale values and build costs.
Commercial Development:
- Offers better yield consistency and less emotional decision-making.
- Ideal for financially astute investors with significant capital.
- Examples include childcare centers, swim schools, and medical facilities with strong tenants and long-term leases.

5. Lessons from Vaz’s Experience

Build the right team, including specialised lawyers, accountants, and planners.
Perform detailed due diligence on infrastructure (e.g., sewage, stormwater) and council requirements.
Understand cash flow needs across the project lifecycle.

6. Commercial Property Considerations

Yield and Tenant Strength:
- Commercial properties are valued based on yields and tenant strength (e.g., government-backed childcare centers).
- Example: A childcare center generating $450,000 annual rent with a 5.5% yield would be valued at $8.18 million.
Tenant Relationships:
- Long-term tenants value secure landlords; building relationships with operators is critical.
Demographics:
- Choose locations based on population demographics, such as areas with high numbers of children for childcare centers.

7. Advice for New Developers

Start small, such as backyard projects, and learn the process before scaling up.
Seek guidance from mentors or experienced developers.
Focus on financial goals and personal objectives rather than industry hype.
Weigh the opportunity cost of development versus holding or selling land outright.

Where to Learn More
For insights into Vaz’s projects, follow EQ Property Group. Vaz prioritises working directly on his ventures over maintaining a strong social media presence.

Tags:

finance, Lending, mortgage