Digging for gold in your own backyard
Many people could be sitting on a gold mine and not even know it! Do you know what development potential your property has? Do you even know the zoning? Where did you find out the zoning? The simple truth is many property owners and investors buy a property for a particular reason such as for a family home or to renovate and as a result they don’t even check to see what other potential the property might have. We have come across it time and time again... people who are sitting on gold mines and don’t even know it.
Some of you will have heard about Dave before. He purchased ‘in the ways’ (on a busy road and backing on the railway line) for a bargain price, did a Reno King’s style makeover and increased the rent by a massive 88% and the equity by 38%. We have nick-named it ‘Dave’s Bargain Buddy’ and it has set him on a course of building up a nice little property portfolio.
Dave’s Cookie-Cutter Method
Using the equity from that property Dave purchased a similar style property where he was able to enclose in downstairs, increase the number of bedrooms and increase the rent and equity dramatically... this has become Dave’s cookie-cutter method.
To Dave’s credit he researched the zoning and development potential, but because of the house size he didn’t think further development was possible and so he did a major reno. This was fine as the property stacked up doing this without a development anyway. One of the reasons Dave thought development wasn’t possible is at the time of purchase council were making it quite clear that they were cracking down on small lot housing.
What Dave didn’t know, possibly because he didn’t speak with a private town planner, was this was in relation to houses on small lots and not townhouses.
What a private town planner will tell you that the council won’t
Dave attended Developing for Profit, got interested in a type of development known as Single Unit Dwellings which Paul Eslick has had great success with, and decided that he should investigate further, and this time by querying a private town planner.
“My town planner says a house or two townhouses in the backyard would be a no-brainer”, Dave states. But why stop there! Dave’s Architect has devised plans showing 4 x 2 bed units in the backyard... wow!
Dave is in a position to do another project, but rather than go out and buy he has found gold in his backyard!
Dave renovated, because this added instant rent and equity, and now using this equity he can employ the consultants and start developing. What a fantastic result!
Dave isn’t alone
Dave isn’t alone though. There are so many stories like his, with even bigger surprises in some cases because the owner never investigated the development potential or even the zoning of the property that they own because it stacked up in some other way or they bought the property with blinkers on... with an idea to renovate only, or live in it only.
This week’s task
So, here is some homework for you:
- Find out the zoning for every property you own. You can go to council for this.
- For any property zoned for further development, take a site plan to a private town planner and ask them to check it over. Do this regardless of the site size and dimensions... you might just get a nice surprise. For example here in Brisbane the minimum lot size for unit development is meant to be 600m2, according to the rules, but we have personally developed lots less than this and have heard about lots as small as 450m2 being developed in the past... so don’t believe everything council tells you.
- For any properties that you own that you know has development potential but didn’t stack up previously, redo your sums. Once again you might get a nice surprise. Also the rules change so the property may have further potential than initially thought
- Do all this before looking to buy elsewhere. The gold could be in your very own backyard.
And never let the real estate agent tell you what the development potential is... in most cases they simply don’t know, even if it sounds like they do!
Investigate Property has purchased two different sites in the last 6 months that stack up for development... that the real estate agent didn’t know could even be developed! In fact in one of them they called it a two bedroom house, yet clear as day was bedroom number three. What a beautiful buy! The client could renovate for profit, then use the equity to develop the site. Won’t the agent get a shock when they see that! Click here to read about membership to Investigate Property.
Taking another approach to this story is Geoff Doidge’s experience with one of his ‘development sites’. In this instance he had fool’s gold! Geoff purchased a property zoned for development planning on developing at a later stage, only to discover that the pipes and overland flow weren’t going to allow any kind of feasible development at all. The lesson here is just because you have the right zoning it doesn’t necessarily mean you can develop. You must carry out a lot of research, but as well as knowing what to research, you need to know who should do the research and how.
Here’s a hint. Your solicitor is not the right person to do the searches for you.
Learn more on this with the Developing for Profit Home Study Course. Over 14 hours of audio material covering all aspects of residential development including case studies that have made and lost developers hundreds of thousands of dollars. Complete on 12 audio discs plus a 13th disc with 2 x 250+ page workbooks. Click here for more information.