Purchasing a property for development
Thinking of purchasing a property with the idea of making extra profits through development?
Regardless of whether you’re planning a future sub-division or the construction of an apartment complex, there’s an art to selecting just the right type of property.
Here are five tips on purchasing a property for development.
Block size
In short, bigger is better when it comes to any larger scale development. Often, as towns grow and real estate increases in demand, the blocks get smaller, yet there are many opportunities to pick up larger plots in growth areas.
If your property sits on a piece of land that is above the average square meterage in that area, it allows for greater flexibility and increased options to capitalise on this type of smart investment
Block usability
Directly related to block size, the usability of a property is an important part of identifying development potential.
Look for things like multiple entry points, wide vehicle access, and a smooth flat block as these allow for greater access and require less excavation and drainage works.
Consider, is the block within close proximity to a main road? Future development often follows main arterials, while recent roadworks are also a positive indicator.
Local growth
When choosing where to buy, consider the local economy and hone your searches to ones that include districts with forecast growth. In other words, is the development that you are considering in keeping with the general local sentiment?
Some townships may be resistant to growth, while other communities are more welcoming of expansion.
Meanwhile, some areas lend themselves to development, including former industrial areas in inner cities, which often convert to high density residential, as city expansion extends outward.
Town planning
Local governments are responsible for town planning, including the type of developments that are allowed and restrictions such as height and density.
Before committing to the purchase of a potential development property, take a good hard look at the town plan and go through it carefully.
Return on investment
What type of development would yield the highest returns? Commercial or residential? And how much do you have at your disposal in terms of funding?
For example, if the budget is limited, small subdivisions tend to be more affordable and faster to complete than full scale apartment blocks, which might be suited to more experienced developers.
If there is an existing building on the site, can it be repurposed to suit the desired changes? These are some factors to consider when deciding the viability of a profitable project
Hire professionals
As a future property developer, you will need assistance along the way, including town planning, legal and financial advice.
And don’t overlook the fact that the process of applying for permits and approvals can be costly and time consuming.
You may also require engineering or architectural consultations depending on the type and scale of the development that you’re considering.
