Common Development Pitfalls

Common Development Pitfalls

Time and time again I am approached by people telling me they would love to be a property developer. Being a full time property investor and developer myself, I often feel this statement is heavily romanticised. Most people just focus on the returns and not the process, glossing over the risks and time involved to make a development a profitable experience. I have regular meetings with people who initially excitedly embarked on their journey of becoming a “do it yourself developer” only to realise that they were actually going to lose money on their project, as well as time.

Don’t get me wrong, I am by no means trying to discourage beginners or discount the monetary rewards you can achieve through a development. I know first hand how beneficial these can be! I just want to ensure that before embarking on such a project, you make sure you know what the pitfalls are. Otherwise the reality is you could end up like the many others I come in contact with who end up losing money.

One of the things that I pride myself on within Subpro is that before we start any project, our first steps are to assess how we can minimise the risk, as well as reduce the cash input required for any investment.

Here are some of the things you should be mindful of when looking at a potential investment property to develop.

  • Do you have enough land to subdivide?
  • Have you met the average requirements as well as the minimum?
  • Do you have enough land for the required amount of car bays?
  • What are the soil conditions of the site?
  • Do you require further investigations to determine if special requirements are needed to meet the r-codes?
  • Do you know how much a subdivision will cost?
  • Is there a slope on the site and if there is do you require retaining walls and fill?
  • Does the council require any development contributions? If so how much?
  • Is there a POS requirement?
  • Does the property have sewer?
  • Are there any easements or will there be any required covenants which could potentially impact the sale prices?
  • What clearances are required?
  • Is there a Town Planning Scheme and what does this mean for your property?
  • Do you have the required amount of open space?
  • Are you aware of required setbacks to not only on the boundaries, but sewer mains and easements?
  • Do you know how much a house or unit will cost to construct and how long this construction time will take?
  • Have you looked at sales evidence in the area to determine what the demographics requires, not only for a rental but also to sell?

All of the above pitfalls should be investigated prior to purchasing a property as a development site. If you are on the hunt for a development site, please feel free to call our office and we can assist you with this.

At Subpro we can help you with the purchase of your development site, and can even project manage the subdivision for you. Looking at the property through experienced investor’s eyes, we carry out all necessary checks and cost up the entire project so you know up front how much a development will cost and the timeframes involved.

We don’t invest in property to learn, we invest to make a profit, and the best way to ensure this is to make sure that all necessary due diligence and research is carried out prior to purchase. As they say- The money’s made when you buy, not when you sell ..so make sure you buy well!

-Abel Jardim

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