Selling with a DA

I've found a property that I'd like to buy, as I think I could get a development approval to change its land use and then on-sell for a profit.

I'm not really in a position to do the development itself, but feel this could still be a winner.

Has anybody had any experience in doing this? I often see ads saying that a property has "DA approval"....
 
I've found a property that I'd like to buy, as I think I could get a development approval to change its land use and then on-sell for a profit.

I'm not really in a position to do the development itself, but feel this could still be a winner.

Has anybody had any experience in doing this? I often see ads saying that a property has "DA approval"....
It can work both ways,depending on the location,price,site,which local council you are working with,Sat's Courier Mail is full of properties like that,but with a lot not all once you do the numbers the only person who makes the money is the title holder prior too the next punter jumping in line,just depends on the price and location..willair..
 
Hi Mate,

we have found that a property would usually sell for more when it has a development approval over it.

what that means to the buyer is:
- no need to waste time (approx 3 months) obtaining a development approval.
- they already know what the infrastructure charges are
- they also know what are the conditions of approval
- they can start to build in shortest time possible

What this means to the seller
- usually sell the property for more money
- the buyer will pay infrastructure charges
- the approval is usually valid for 4 years, so you can take your time.
- all the seller needs to pay is the council application fee and the town planners fee.

hope it helps

regards
Antonio
 
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This post is timely for my self as well
Is there a ball park figure as to what percentage this would add to the properties value?
 
I suggest its dependent on the DA itself.

If its a basic duplex or subdivision that the council falls over themselves to approve you would expect to get your DA costs and maybe a few thousand extra for your time.

The big bucks come when you DA something usually unobtainable. Eg 3 town houses on a site normally allowing 2 or 3 story units when usually 2 stories or the big carly crutchfield sell of optioning 6 house for a 50 unit site that can take a year or two to DA and you have it signed sealed and ready for the builder. Then they will pay over the odds

Get my drift. if you sell with a regular DA that's nothing special it will depend on the buyers reasoning as to how much extra they will pay for your effort in speeding there process up. Many builders will build one and have another in council ready to go on completion of the first.
 
I've found a property that I'd like to buy, as I think I could get a development approval to change its land use and then on-sell for a profit.

I'm not really in a position to do the development itself, but feel this could still be a winner.

Has anybody had any experience in doing this? I often see ads saying that a property has "DA approval"....

By using an option to purchase (or hold) the property, you may be able to come out of it with minimal costs, especially if using vendor finance. (apart from DA fees). By going in with an option that gives you the right to purchase, but not the obligation to purchase the property, you will be able to break out if the DA is unsuccessful.

You could, if you have planned everything, sell your option to a developer once the property is DA'd, even before you exercise your right to purchase the property.

This is how I understand it, and am just learning this process, but I am keen on the potential cost savings (and bigger profits) by going down this route.

More research required though.

Cheers,

F
 
Update!

Sorry to dig up an old post- thought it'd be better than starting a new thread.

Looking to do similar things in Perth, can anybody give advice or comment in addition to anything mentioned in this post- maybe some experience gained in the 4 years since last update?
A buddy and I are quite interested in this route.
Post or PM please! Cheers, J.
 
Hi J
The strategy of putting together DA and on selling can work, however it is dependent on your market and whether the DA stacks up, builders will only be interested if there are profits to be made.

I have used this strategy in Melb where it seems to be quite common. I put together a DA for an 8 unit site, paid $597K, 20K architects fees and on sold it to a builder for $907K 12 months later. At this time the market was still rising, hard to secure development sites, my DA saved the builder 12 months and of course there was profit to be made on completion of the build. No point putting together a DA if there is nothing in the deal.

However, in the Perth market I don't think this strategy works, not for the smaller developments, perhaps larger.. not sure 10+??. I certainly don't see many people buying/selling DAs and a recent property I looked at for sale with council approval for a rear property did not actually add any value to the sale price.

I would not buy a smaller development with DA in place as I can do it myself and would not want to pay a premium for this as it would be biting into my profits. With the development sites going through the roof in Perth at the moment and margins shrinking I think it would be a tough call trying to sell something with a DA in place.

MTR:)
 
In Perth I had always considered a block with DA being sold was because of two things
- person found out that there was no profit and ditching the deal
- person lost job etc and couldn't afford to do development

It wasn't until I was looking at the Melbourne market and I saw it for it's positive light of saving time etc. You do have to like what is in the DA though as once DA is approved there is little you can do besides some internal tweaking or it's more hassle than it's worth.

I've seen poor DAs that I wouldn't pay 5 cents for and some that are brilliant. So you need to know what you are doing to create a DA which is a value add.
 
Exactly WM. Also, I think in the Melb market a developer may get stuck with objections and may end up going to VCAT and I believe waiting time of 1 years, developer may not want to take his/her chances.

The builder who purchased my DA in Melb had many on the go and just jumped from project to project, though by the time he completed the units the market had turned and the values had dropped so he got stuck with 6 that he could not sell.
 
Thanks for the advice!
An associate and I are planning to get stuck into the property development game. He's got knowledge on securing land via option, having worked as an architecture grad I have some knowledge of securing DA's. Seemed like a great way to get into the game without forking out large amounts of somebody else's money. Profitable AND FUN!
But it seems things here are done the whole way through most of the time..
Besides looking at online property listings, does anybody know any other sources of market information available for the public? I'll probably call a few agents tomorrow..
Muuuuch more research + groundwork needed!
Cheers.
J.
p.s. If anybody has any other useful points they'd like to add... don't hold back!
 
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