Sometimes it can be the simplest of things that bring a development undone. Do not think you are immune to foolish mistakes!
Here are our 7 top tips for researching development sites:
Speak to a private town planner, not council about your site.
The council can provide a truck load of useful information about your site, including what can be developed according to the rules. What they can’t, or are reluctant to tell you, is what can be achieved outside of these rules. Town planning is all about justification of the use, not fitting in with prescribed rules. That said, the rules still need to be treated with respect, hence you should speak to a private town planner.
Follow the infrastructure
Not only does this make good sense when it comes to developing, but when buying in general. New infrastructure, no matter what it is or where it is, has the power to make or break investors. One negative might be that your once quiet property now has a freeway as a neighbour! The positives, however, may include increased density allowances, new transport options, new cafe or shopping precincts and an increase in employment and therefore an increase in rents. You should try and absorb as much information as possible about infrastructure proposals and developments in all areas that you are interested in.
Never believe the agent
For a start, the agent works for the vendor, not the buyer, no matter how charming they might be. Secondly, in a lot of cases they aren’t qualified to talk to you about development potential and when they do, they often get their information from unreliable sources. Also, they will always tell you the positives, but not necessarily the negatives. The agent can actually be wrong in a positive way as well... they may under quote the potential of a property, which was the case with one we sourced in late 2006, when the agent misquoted the achievable development density by half and the potential height by two storeys.
Have your team in place
There will come times when you need a reliable answer quickly. A good development site will often be unavailable tomorrow, so you need answers today. You need a team in place, a team of experts that you can rely upon. Your team must cover all aspects of development... do not ask your town planner what the construction cost will be – they don’t know!
Have your back of envelope ready
A ‘Back of Envelope’ (BOE) is a quick and easy feasibility. It is tried and proven, but not too complex, allowing you to immediately and quickly decide whether there is enough potential profit in a project to proceed with an offer. A complex feasibility takes a long time to complete and may be the difference between securing a property and missing out to a hot and ready developer. There is plenty of time to do a complex feasibility after you have the property under conditional contract. Until then, use your BOE.
Research business and commercial listings and agents
There are specialist agents who sell development and commercial sites. Get on their marketing list and continually consult their advertising of available properties. Additionally, there are often business and investment listings located in specialised sections of newspapers devoted to selling these kinds of properties. In the Courier Mail it is the ‘Property Investments’ classifieds and it is NOT located in the real estate section of the paper.
Talk to the neighbour of sites you already own
Many people already sit on a development site and don’t know it. Often it is because the site is too small or does not have enough frontage to be developed... so why not make it a development site! By combining with your neighbour you can often achieve what was previously not possible. Further, it can be done without the need to purchase another property if you do a Joint Venture (JV) together.
This is just a small list of some of the tips for researching a development. In fact, Investigate Property researches up to 32 aspects of a property when sourcing for their clients.
Learn more tips, as well as what can happen if you don’t do the right research, at 'Developing for Profit', a 2 day, development focussed workshop to be held in Brisbane on 21st to 22nd June, 2008.
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