Hi guys,
As many SS formites are looking at developing I thought it may be a good idea to start a thread on how to source the right properties, mitigate risk and of course to achieve the best outcome.
Feasibility
Attention to detail is the key between a profitable development and a financial disaster. One main aspect that will determine what you can and cannot develop is the amount of funds available to you and your borrowing capacity.
What process do I need to undertake to determine which site will be a profitable one?
Choose one council area so you can study that particular councils requirements rather than being overwhelmed and looking anywhere and everywhere. You don’t have to develop their but you can learn the process and apply to any other council.
Study the planning code of the council as most councils will have its own twist to the planning code of that State.
You may find that you need to research a few areas before settling on a particular area to develop.
Drive around the areas that you are researching in order to determine whether that particular council is pro-development or not and determine which type of dwellings are in demand.
Once you have found a potential site you can be breakdown the feasibility study into a few key points. These are:
• The purchase price (including stamp duty)
• The number of dwellings
• The cost of construction (including contingencies and demolition)
• The interest cost (this is where determining the length of time to complete your development is important)
• Planning/DA fees and all council contributions including subdivision
• Your selling costs (agent fees, title fees, legal fees)
• The end value of the dwellings developed (be conservative)
From this you can then work out your dollar profit, your profit margin, your holding costs and the amount you need to borrow versus the amount you need to tip into the development.
It would also be good for other developers to contribute their knowledge to this thread.
Oscar
As many SS formites are looking at developing I thought it may be a good idea to start a thread on how to source the right properties, mitigate risk and of course to achieve the best outcome.
Feasibility
Attention to detail is the key between a profitable development and a financial disaster. One main aspect that will determine what you can and cannot develop is the amount of funds available to you and your borrowing capacity.
What process do I need to undertake to determine which site will be a profitable one?
Choose one council area so you can study that particular councils requirements rather than being overwhelmed and looking anywhere and everywhere. You don’t have to develop their but you can learn the process and apply to any other council.
Study the planning code of the council as most councils will have its own twist to the planning code of that State.
You may find that you need to research a few areas before settling on a particular area to develop.
Drive around the areas that you are researching in order to determine whether that particular council is pro-development or not and determine which type of dwellings are in demand.
Once you have found a potential site you can be breakdown the feasibility study into a few key points. These are:
• The purchase price (including stamp duty)
• The number of dwellings
• The cost of construction (including contingencies and demolition)
• The interest cost (this is where determining the length of time to complete your development is important)
• Planning/DA fees and all council contributions including subdivision
• Your selling costs (agent fees, title fees, legal fees)
• The end value of the dwellings developed (be conservative)
From this you can then work out your dollar profit, your profit margin, your holding costs and the amount you need to borrow versus the amount you need to tip into the development.
It would also be good for other developers to contribute their knowledge to this thread.
Oscar
