What you need to know about property development (TOP TIPS)
So you want to buy a property to develop or subdivide, but not sure where to start or what to look for?
Knowing how to secure a property with superior development potential can be difficult, especially if you are just starting out.
Here are our top tips for a successful development project:
Look for blocks with minimal slope. Blocks with greater slopes require more retaining and earthworks, which can significantly reduce the net profit on your project.
Don’t skew the sewer
Just as you confirm the zoning on the block to ensure the development is possible, confirming the location of the sewer line is crucial. While some blocks will be advertised as a three-unit site, the location of the sewer line can actually restrict it to a two-unit site as dwellings can’t be built on top of sewer lines.
As well as the size of the block, look closely at the shape. Irregular-shaped blocks can restrict dwelling design, thereby incurring extra design costs.
Weigh it up
Look for a block where the cost is almost the same as the block value, so very little of your purchase price is wasted on the existing dwelling.
With battle-axe blocks, keep in mind that side access has to be a certain width for subdivision or building.
Do the maths
Get an estimate of the current market value of your planned development by, at the very least, visually inspecting all comparable dwellings on the market, as well as those recently sold. The estimated sale price of your development – minus all costs, including block purchase, stamp duty, construction fees and an agent’s commission, should leave you with a satisfactory profit. If this is not the case – move on and continue the search for a suitable development opportunity.
If you’d like to learn more about property development, call us on: 08·9381·7450.
Or, if you’ve got any property investment questions, why not complete our Getting Started form to get the ball rolling.
Or, if you want to learn about different property investment strategies, or learn more about investing in property in Perth, why not read our free Get Ready to Invest in Property eBook.
It takes you through five simple steps to help you understand strategic property investment and how to make it work for you. Whether you’re a first-time investor or re-entering the market, it will help you navigate the sometimes complex world of property investment and associated issues you need to consider.
So if you’re ready to learn some great insights into getting started in property investment, download your free Get Ready to Invest in Property eBook here.