Though some small-scale property development projects can deliver profits upwards of 20 per cent, choosing the right site can sometimes be a major challenge.
Holding costs, which occur while you get plans approved and building quotes, can 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 are turned on their head when you’re looking for a development site:
– Roads and lanes: from a development perspective, the more road and lane access to the property, the better, as less space is used up by driveways.
– Trees: check if there are any council impediments to chopping trees down as they can sometimes be 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.