Selecting a property with development potential
Knowing how to secure a property with superior development potential can be difficult, especially if you are just starting out. Top tips to ensure successful developing include:
- Look for a block where the cost is almost the same as the block value, so that very little of your purchase price is being wasted on the existing house.
- Look closely at the shape, as well as the size of the block. Irregular shaped blocks can cause extra design costs and wasted space.
- Look for blocks with as little slope as possible. Blocks with greater slope need more retaining and earth works which can add to your costs.
- As well as confirming 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 3-unit site, the location of the sewer line can actually restrict it to a 2-unit site as homes can’t be built on top of sewer lines.
- With battle-axe blocks, keep in mind that side access is required to be a certain width before any subdivision is approved.
- In small developments it is very hard to develop and sell immediately at a profit since the gain is mostly eaten up in stamp duty, purchase costs, resale costs and taxes. You’re far better off not selling and rather building a portfolio of properties that can grow in value and increase your wealth.
- Before you start looking for your development property, talk to your finance broker to see what type of development you can afford.
Don’t forget, if you’re not an experienced developer or if you have a full time day job, to get the best results for your money and effort, get an expert on board who has the time and skill to handle it for you.
If you have an interest in building your wealth through property, then call us on (08) 9381-7450, or request a FREE Starter Pack.