Property development starts with the right site Not all property investors invest with simply the intention of being a landlord.
David Cotterill, RE/MAX Experience Property, is one of Australasia’s leading experts in property strategy and delivery. He works on projects from concept to completion, with buyers, sellers, developers, builders, architects, town planners, surveyors, body corporate managers and solicitors.
Are you an investor with an interest in property development, always on the lookout for that ‘right’ property that delivers you a potentially profitable development site?
1. H ave your A-team in place. These are the people integral to a project’s success – from strategic planning to execution. They are the accountant, surveyor, town planner, architect, engineer, agent, builder, solicitor, real estate agent and body corporate manager. Be sure you have them all on your team.
Let’s say your start point is settling on a suburb for your development.
Step 1: Due diligence on local area Your plan is to understand the local council’s planning scheme and its willingness to allow developments to be undertaken. Review documents on the council’s website such as the DCP (Development Control Plan) and LEP (Local Environment Plan) guidelines. You may choose to meet with the council town planner. Through your research, you are seeking the council’s attitude to development and any proposed changes to current planning policy. Factors influencing development potential include zoning, height or density restrictions, open space requirements, minimum street frontages, side and front setbacks, heritage constraints, demolition restrictions, flood and fire controls, car parking guidelines, council levies and fees, and policy around established trees on the property. A property developer must undertake an awful amount of local due diligence long before starting to look for specific development sites.
His suggestions for investors with a view to developing are:
2. D on’t overpay for the site at the beginning as costs will only compound, reducing your profit. 3. K now the timing of other projects in the same market. Have a point of difference. 4. There will be speed bumps along the way. Developing is more like a game of Snakes & Ladders than Monopoly.
Step 2: Locating the site Now it’s down to the nitty gritty. • W ill the overall size, the length and the width work? • W ill a corner give better subdivision potential? • W hat’s on the site at present and is it of value (rental income while you get development approvals, for example) or is it going to cause a problem? (Heritage issues or requiring asbestos removal, for example)
• What’s the soil like? • What is accessibility to the site like? • Will what you have in mind marry well with the character of the neighbourhood? • H ow would you assess neighbouring properties? Are neighbours likely to welcome a new development. Have others in the street set a precedence? • Are there easements or covenants associated with the site?
• I s the site flat or is the slope in the right direction for sewerage and drainage? (may be costly if not)
With so many factors to consider
• Is the aspect okay?
property development is an area of
• Will utilities such as water, electricity, gas and telecommunications need upgrading?
specialisation. The person you need
• W hat obstacles are there? (including trees and power poles)
who can help you on the wealth-
when evaluating a potential development site, it is clear why
is someone who has successfully sourced, project-managed and completed development projects, creation path.
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