Property development is becoming an increasingly lucrative way to capitalise on an investment.
Whether you intend to subdivide land you currently own, or purchase a parcel with the intention to develop, it is important to plan ahead and recognise the key stages throughout the process.
The following information has been prepared to help you recognise each stage and make informed decisions to assist your property intentions to turn into a reality.
Property development is fundamentally about enhancing and diversifying the utility of developed land.
Developers reconfigure existing sites for various purposes, transforming them in ways such as replacing a single detached home with three townhouses or adding an additional unit to the plot.
The core objective of property development is to unlock and amplify the land’s financial value, regardless of the specific changes made.
SUB-DIVISION (LAND)
Subdivision is the act of dividing land into pieces that are easier to sell or otherwise develop.
Dual occupancy is simply a property with two sources of income with multiple dwellings on the one property. Returns for both the short and long term are superior and this assists tax payers with the recurring question of “how can I make my property positively geared? (Positive gearing: positive gearing occurs when the income an investment property is generating exceeds the cost of owning and maintaining it. Investments are supposed to make money.)
If you buy a corner block property for the right price, this is like finding gold. The reason is that corner blocks provide easy access for both properties, and it provides street frontage for both properties as well. Remember that if the corner block has guttering and a curb on one side, the council may ask you to complete this on both sides, in order to get an approval for subdivision. A 50-metre kerb including guttering could cost you $30,000, which could potential minimise your profit margin.
Before purchasing a property, try to subdivide on blocks that are level, rather than sloping blocks, as it will be cheaper and easier to subdivide. If you decide to subdivide on sloping blocks, it will require you to pay a lot more for extra services, and the council will demand a greater minimum size plot. For example, a minimum size plot for a sloping block may be 400sqm, compared to 300sqm for a level block.
Every council will have their own guidelines on the minimum land size that you are able to subdivide on. But when you look at Melbourne/Victoria as a whole, properties that are larger than 600sqm are normally allowed to subdivide.
Most councils will require that the property will have enough space to build a driveway between the bound of the property and the house. Therefore, before you decide to buy a big block of land to subdivide, ensure these is adequate space for a driveway, this will range from 3 – 3.5 metre, comprising of any landscaping.
Ensure that you consult with the local council about zoning. If you plan to build a townhouse or a unit (example project), and make sure that the property is zoned for each of the structures.
If you purchase a block, that has an existing property on it, make sure you get it inspected, to ensure that is has been built properly, in order to keep the cost of constructions to a minimum.
People often have the ambition to subdivide and try to make a huge profit margin, however they do not always have the knowledge to do so. However, Buyers Agents can assist you through this process of finding a property or a block that can be subdivided.
So many people think that subdivision or dual occupancy is a simple process, where you buy a block of land, split it into two, three or four blocks, and then trying to sell it for a huge profit margin. However, in reality the process is complicated.
The reason why it’s a complicated process is because for you to subdivide on a block of land it is vital to get approval from the local council, as each council will have their own regulations on what can be done, and what can’t be done.
Getting approval from your local council can be a sluggish process, and there is a possibility that you may not even get an approval from the council. Therefore, if you want to maximise your time, and avoid wasting time, it’s important to consult the local council first and familiarise with the regulations of subdividing, or consider consulting a buyer advocate to assist you in the process.
For your property to be permitted for subdivision, it needs to comply with the council’s minimum lot size. Other requirements involve the width of the property, the overall area and zoning. Zoning is important when it comes to subdividing, as there are many areas where you cannot subdivide due to zoning. Requirements are accessible on most of the council websites.
Multi-dwelling projects can be plagued with hidden costs that diminish profit. Our experience can reduce the risk of costly errors and ensure a profitable experience. Example Project: Two Lot Subdivision
With our combined experience we have helped subdivide over 100 multi dwelling properties across Melbourne.
Our team consists of an experienced Property Surveyor, Development Consultants, registered Multi Development Builder and qualified Real Estate Agents.
Our Step by Step Process:
Before you make the decision to embark on the property development journey, there are key people who will be able to offer you insight and support to make an informed decision:
How long is the development process?
Property development is rarely a ‘get rich quick’ venture. The majority of developments take at least 1 year, but usually they are closer to 2 to 4 years. The process of organising development plans, council permits and liaising with a host of different contractors is a timely process.
Many potential developers are overwhelmed with the magnitude of considerations and the time required to organise their development. Many developers enlist the services of a project manager to overlook the day to day progress of their development as their connections with council administrators, trades and surveyors often speeds up the process.
After deciding that property development is right for you, what is the process?
What to do now:
For an obligation-free conversation, contact Wise Real Estate Advice to discuss how their professional property development managers and buyer advocates can turn your property goals into property development success.
