Property development for beginners? There’s a course for that

Saturday, 25 May 2024

John Kenel has built many homes around Hamilton and is launching a course to train future property developers.

A Waikato property developer is starting a new course to bring newcomers into the industry and help tackle the housing market’s supply and demand issues.

The potentially lucrative career may appeal to those willing to let go of $200,000 in a couple of years while working to bring a project to market.

Developer John Kenel of Assured Property reminisces about the time when it only took six months, maybe seven, to finish a town house property development - from buying land to listing the final product for sale.

That was two decades ago.

Developer John Kenel of Assured Properties wants to train more people to become property developers.

Today, six months, “often nine”, will get you as far as getting consents.

Then it takes another year to 18 months for construction.

One of Kenel’s completed developments on Hammond St in Hamilton.

Since 2004, Kenel reckons property development has become more complex with a lot more steps that come at an added cost.

“One of the issues with the increase in time frame is the holding cost, especially with high interest rates.

The finished product, this time on Beverley Crescent in Hamilton.

“So a lot of developers are paying 10% plus to borrow money at the moment, and let's say you buy a million dollar piece of land, it's gonna cost you $100,000 a year. If you hold it for two years, it's costing you $200,000.”

Every new development “takes longer and costs more”.

It’s not going to win kitchen of the year but it’ll provide many years of functional use.

But for him, the “personal gratification from building something” is worth the expense.

Many others find the job “financially rewarding” and some use it as an investment vehicle.

All the necessities covered, a key part of building homes.

Whatever the reason, there is no blueprint on how to be a property developer and “it is really hard to start,” Kenel says.

“Developers don't share their knowledge and it's not that developers are mean or they're holding on to it, but the way that you learn about development is by making very costly mistakes.”

One of his completed developments on Te Rapa Road in Hamilton.

The developer has seen a sharp rise in demand - and round-the-clock DMs on his social media channels - on tips to be a property developer.

Kenel is launching The Property Development Club pilot course on June 23 with a class of 20 pupils ranging from a 20-year-old university student to an insurance broker in their fifties, seeing the “obvious demand”.

“People who live on a large section and they'd like to put a unit on the back for mum, or they might be a young couple and are starting to pay the mortgage down a bit and got a big bit of land and they're like, wow, if we could put a unit on the back and we might get a $400-$500 a week and help us pay off our mortgage.”

About 50% of the Hamilton-based course will cover technical aspects on how to become a developer and the rest will be around building a community, “a group of people that you get to know and trust”.

Being a developer is a “very lonely game” and the community would be a source of guidance for newcomers.

“The way I see it working is having an online platform you can log in and there'll be a whole bunch of videos there”, covering every stage of the development process, Kenel says.

“There won't be too many, but imagine three to five years down the track you'll log in, there'll be hundreds of videos.”

For example, if someone’s starting a project and wants to learn about finance, “there are 50 videos on finance, Q ‘n’ A section, and more”.

The students graduating from this course will be part of an online forum where people from across the country can share their knowledge and experience.

While it “certainly helped” to have cash or someone backing you, Kenel says people often don’t realise “you can actually start with less than you think”.

“If you can package up a development, do your due diligence, put a concept together, do the numbers and you know how to present it properly to the right people, there are many interested in backing you.

“There’s actually a lot of money out there, sitting in term deposits earning about 6% interest, looking for a home.”

Kenel said developers “typically don't share the information because it's cost them a lot to learn it, and they're also concerned about creating competition”.

His focus is medium density residential property - townhouses and duplexes - almost all in Hamilton and walking distance from the hospital, university and the CBD.

“So if I were to go and teach a whole lot of people about development, when a site comes up that works for me, now I'm competing with a whole lot of other people.”

However, Kenel says he has gained expertise in the last 20 to 30 years and it was a natural desire to teach others.

Still, one big factor to start a course was to bring up the “dropping” home ownership rates in the country.

“We complain that less and less people can afford to buy a house, but it's never gonna turn around unless we have a goal.”

“If I could train thousands of developers, then they could build hundreds of thousands of homes.

“And the simple laws of supply and demand dictate that if there's more supply, the prices should be lower.”