When it comes to developing properties, my ideal strategy, as a buyers advocate, is to never sell any project we complete.
The reason is simple: while you make an initial margin during the development phase, the real wealth is built over time. Holding onto the property allows you to maximise your gains in the long run.
If you have the means, keeping the property rather than selling it can be incredibly beneficial. By holding onto the asset, you avoid paying GST and capital gains tax, as well as other taxes that would be faced when a property sells. This strategy aligns well with many clients we assist through our buyers advocacy service.
In addition to tax savings, you also benefit from depreciation. If your finances allow for it, you can refinance the completed project and access a substantial amount of equity without needing to sell the property. This is a strategy used by Harry Triguboff, the owner of Meriton and one of Australia’s wealthiest people. He is in a position where he no longer needs to sell his developments; instead, he holds onto them and builds long-term wealth.
However, there are times when selling may be necessary. If you’re in a situation where you need to sell one of your properties but can hold onto another, that’s a strategy I would recommend. Retaining the property enables you to avoid the associated taxes and continue benefiting from depreciation. Ideally, you could refinance the property and free up some capital for other projects.
That said, not all properties are worth holding onto. When developers take on a project, they often focus solely on whether the numbers add up in the short term, without giving much thought to the long-term potential of the property. If you’ve developed a site that isn’t a great asset, such as one located on a busy main road or one with other issues, it may not perform well in the future. In those cases, selling both properties might make more sense. But if the asset is in a good location and has the potential to perform well over time, holding onto it is the smarter move.
Of course, selling one property does come with its own advantages, particularly in terms of debt consolidation. By offloading one asset, you can pay down a significant portion of your debt, making your overall financial situation more manageable.
But overall it really comes down to what you’re building and where. Most people aren’t going to be at the scale where they are building large apartments and selling them off the plan. These are usually the types of products that struggle for growth over the long term.
However, smaller projects like duplexes are more obtainable to smaller investors and also have more long-term growth potential when you can hold onto them. The other big advantage is that these types of projects are also a lot faster to do.
For a relatively straightforward site with minimal excavation, you can expect the entire project to be completed within 12 months, from breaking ground to handing over the keys. Most duplexes, if built on a level site and without the need for extensive technical work, can be finished within this time frame.
However, if the project involves more technical aspects—such as a concrete build or more complex construction requirements—you might be looking at a longer time frame. In those cases, an 18-month timeline is more realistic. The additional time is necessary to account for the complexity of the construction, which inevitably slows down the process.
Development projects are a fantastic way to build instant equity and can really accelerate your property journey. However, always think long-term and understand that the real gains are made the longer you hold onto the properties.
Engaging a trusted buyers advocate through Henderson’s buyers advocacy service is your best chance at navigating the competitive real estate market.
