What To Look For When Buying A Property
When it comes to property investing and developing it is imperative that you undertake comprehensive due diligence and a feasibility study when you are selecting a potential property. Property developing can be fraught with dangers and cost blow-outs for the novice. Only through experience can you reduce your risks and find and overcome any obstacles before you begin. As regulations change, it is a process of continual learning. Even after 20 years of investing and developing in property, I still get caught sometimes by a curve ball that I didn’t see coming.
Here are some of the things that I look for when making my decision to purchase any development site:
- Firstly, I look at the land size and zoning to work out how many units I can place onto the property and what the average cost per lot works out to be. You can find the zoning information our from all Council websites or give their Planning section a call; as they are always ready to help out with information. Keep in kind that, just because the zoning says you can fit a certain number of buildings on the block, it doesn’t mean you should.
- You also need to check with Council if there are any development and/or public open space contributions required.
- I then have a look at the location of services, facilities and transport nearby to determine the demand and type of unit that will best suit the location; eg if the property is close to doctors, shops and transport, then the completed units will usually be rented or purchased by older people looking for convenience.
- Once I have established that the property presents good value for money and suits my budget for the land and construction, then I find out the location of all services on the property. In particular I always like to see where the sewer line is located; as many of Perth’s sewer lines are located on private property which can impact negatively on development.
- I also look at my competition on reiwa.com.au and realestate.com.au which shows how many similar properties are listed for sale and their asking price. This should give you an indication of what to expect to sell or rent your completed units for. Also both of these websites have a wealth of information including suburb profiles, median house and unit prices etc.
- If all of this stacks up, I undertake a feasibility study which shows all costs fees and charges associated with the development including stamp duty, settlement agent fees, interest, real estate selling/leasing fees and gst implications that you may be required to pay.
- Only if all of the above items look good and I firmly believe that there is likely to be a profit in the development, do I then proceed to negotiate for the purchase of the property.
Hopefully this information helps you in making your decision when it comes to purchasing your next investment or development site. Just be aware that there are many facets and hidden items in property development that can affect the profitability of your development and you need to find out everything possible about the property before you proceed with your purchase.
If you have any questions of want to learn more about property investing and developing please call me on 0412 373 404 to have an obligation free chat.