Shopping for a Development Site

By Sharon Fox-Slater on 29 Oct 2014
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Shopping for a Development Site

Photo: Quinn Dombrowski

Some small-scale property development projects can deliver profits upwards of 20 per cent, but choosing the right site can be a major challenge.

Holding costs, while you get plans approved and building quotes, really add up. That means it is often better for development beginners to consider buying a run-down property, rather than vacant land, on which to build apartments or units.

The advantage of this approach is that rent from the old property helps to offset holding costs, and negative gearing may further cushion the financial blow.

Apart from the importance of location, location, location, conventional search criteria is turned on its head when you’re looking for a development site:

Roads and lanes

The more road and lane access to the property, the better, from a development perspective, as less space is used up by driveways.

Trees

Check if there is any council impediment to chopping them down as they are often protected.

Setbacks

It is an advantage if neighbouring houses are built close to the street as your development might be able to do the same, wasting less land on front gardens.

Built environment

A development is often judged in relation to what’s built nearby, so it can be an advantage if neighbouring houses are two or more storeys tall.

Attractive

There is more likely to be opposition if you want to demolish an attractive or heritage home than a house that’s out of character for the area or just plain ugly.

Slope

A flat site is almost always less expensive to build on, although a slope can sometimes be used to creative advantage by a good designer.

Precedent

It may be easier to get planning permission for your development if you can show there are other, similar developments nearby.

Sewers and easements

It is essential to know where the sewer runs and to take account of any easements when doing your sums.

A successful development requires the right ‘product’ to be built at the right price for the right people at the right time.

Research at every step of the way is crucial – particularly in terms of what councils will and won’t allow – and what buyers are looking for in a particular area.

Before venturing in, consider whether you have the time, expertise and an appetite for the risk that comes with property development.

If not, it may be safer to stick to your knitting – a conventional property leased to tenants with the back-up of landlord insurance.

About the Author

Sharon Fox-Slater is the Executive General Manager of RentCover, a division of EBM Insurance Brokers which insures 120,000 investment properties around Australia. With 20 years’ experience in landlord insurance, Sharon’s top priority is customer service and positive customer comments are her biggest marker of success. Despite leaving school at 15, Sharon has forged a ground-breaking career – she was the first woman to become a Fellow of the National Insurance Brokers Association. Sharon was recently honoured to have been included in Insurance Business magazine’s Elite Brokers 2013 list.

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