WHILE SOME principals are considering introducing strata management or mortgage and insurance broking into their businesses, Bruce Young from Spatial Property Group believes one overlooked option is becoming involved with property development.
“I started out like a lot of young people, not quite sure what I wanted to do. So I ended up doing some courses in town planning and civil engineering,” he says. “Once you zip everything I learnt all together and throw in a bit of sales and real estate I found I had the skills to become a property developer.”
Although it wasn’t on his radar, Mr Young said he enjoyed the work because it allowed him to do something new and different every day.
In 2010, Mr Young helped found Spatial Property Group and began his first steps into traditional real estate sales.
“We’re both a property developer and a real estate agency,” he says.
Mr Young knew he had to offer his customers a complete package, including an outlet to resell properties when his previous clients decided to move again.
“So the nature of the business is both project marketing and what most would refer to as a traditional real estate office,” he says. “Often when people buy one of our properties, they need to sell one too. We realised this and decided we needed to offer that to our customers.”
But the shift from a property developer to a real estate business wasn’t an easy one, with Mr Young admitting he needed help.
“When starting up Spatial, the general real estate side was the part I knew least about. As long as I can acknowledge the areas that I’m not sure on, I can then surround myself with experts who do know about them,” he says.
“Because of the skill of my business partners and the avenues that we’re all covering, there’s nothing we’ve run into that we haven’t predicted or couldn’t see coming. However, there are certain areas where I’ve said ‘I’m not a hundred per cent sure of this’ but the people beside me have stepped up.”
Mr Young found success in real estate after working in property development. But can the average principal reverse the path and head into property development from real estate?
“I believe that both sides to the real estate coin, property development and traditional sales, can go either way to embracing the other,” says Mr Young.
“So a real estate office can become a developer, or they could come from the other direction like me.
“It’s about making sure that you understand there are significant differences between the two. It’s very easy if you’re in a real estate business – and I see this a lot – to sit there and say ‘This development thing is going to be easy – we do some developments, we sell a heap of property’, but the skill set required is completely different.
“I believe there is a hell of a lot more involved with embracing both businesses than sticking with one. The skill set you need to maintain both sides is unlike any that a traditional agent or principal would have.”
According to Mr Young, even mums and dads think it’s easy at first when they subdivide a lot. “It’s not until it goes pear-shaped that they realise it’s not so easy”, he warns.
MAKING A MOVE
If a principal is considering expanding into the development space, Mr Young believes the best advice he can give is to be prepared.
“Don’t underestimate the complexity of the other element of the business within the development space,” he advises.
“The complexities of development, particularly the approvals, systems, the costs that are involved in doing developments, and an extra emphasis on getting it right, are all big steps for any agent.
“In normal sales, if you stuff up, maybe they’ll tell their friends and their co-workers who might eventually be looking in your patch. You could miss out on another couple of sales all up.
“But in development, it can significantly damage your brand.”
But just like residential sales, if you put in the effort for your client, you will receive the dividends.
“If you have a long-term vision, my belief is you will certainly be far more successful,” Mr Young says. “Some people in the business feel they can come in, do a 10-lot cut up, sell it and walk away. If you do that you’re not going to have the value add to the business that you need to. You need to develop something of the standard that you’re happy with.”
And according to Mr Young, if you’re not happy with what you’re producing, you’re doing something wrong.
“I work on the basis of when we do a development, or get involved in one, my kids have to be proud enough to say that they were involved with it and that they’d live in it,” he says.
“Don’t worry about yourself. Worry if the kids are saying they wouldn’t live there because that survives a generation. I think if you constantly think about that then it’s been successful from a financial basis, but also a community and standards basis.”
The jump from traditional sales to development may seem daunting for some principals, but Mr Young is adamant there are long-term benefits to expanding your business beyond vanilla residential sales.
“Some people want to buy a house in an existing suburb and they need an agent to marry them to a seller for the right price, and that’s fine. But in development you’ve got to add other things to that as well, and those two are skill sets that can quite easily be zipped together if you’re switched on enough,” he says.
“I wish more people would do it; but then again I don’t because there’d be less for me!”