Seeking Help on First Development

Good job on the buy and hold position. Now see if we can put some detail into your questions.

– I have read many posts containing horror stories about the time for DA approval, why is there so much uncertainty with the time for approval? How can it vary from 3 months to 2 years and What is it that is actually taking up this time? Is it purely bureaucratic admin? What can be done to better ensure a speedy approval? It seems very unusual how vague this whole process is especially given the potential loss on the table if approval times blow-out.

There’s uncertainty because there is different types of buildings that require different types of notifications and consultations and also who you are getting your advice from. There’s certainty available when you know what your doing.
I.e funding the costs to rezone a area that might be zoned rural but adjacent a existing residential zone might take a year or longer.
Developments i.e. a 1 into 3 lot subdivision in a existing residential area might be deemed a complying RESCODE and not require council approval but can be approved by a private planning certifier. In those cases you can have no bureaucratic admin BS. You have your plans they comply with the planning code you submit and get your consent in days. If your getting approval for a multi-rise building, allow for it in your feasibility, rent the property out for a year, rent it for 18 months.

– I’ve considered office, retail and industrial land development, however, I am leaning towards industrial mainly due to my background in construction. What are other peoples experiences with the 3 commercial property types? Is one favoured over the other or is it a matter of personal preference?
– My plan is to purchase land in fringe industrial zones in victoria that are positioned for re-zoning, build low-cost warehouses to establish an income stream and hope for the potential upside due to re-zone. I would like to know peoples opinion on this strategy in general, is it too speculative to target areas with the view for a re-zone? Has anyone had success in the past with anticipating zoning changes? any insight on this would be great.

All three viable but all require the same skill sets, who are you building for, who is your end user, do they even need a warehouse in this location, can you mitigate some risk and get them to sign a heads of agreement for a lease for your warehouse before you have even bought the land and built it.
Don’t use the word hope, never hope. You can still capitalise on a rezoning of the area, just do it when the council release the statement of intent that they are going to rezone, not hope it gets rezoned. Those “hoping” properties should be part of your buy and hold strategy. Are they future plans where the council want to go, where do they want to development further or rezone.
Residential is easy to understand, easier for the buyer to understand, easier to finance for a beginner.
Commercial is easy to understand if you understand valuation, commercial leases but can be harder to finance
Warehouses, for storage etc or industrial use are only as good as the income that is attached to it and the strength and length of the lease.

I still need to do a fair bit of legwork re. contacting town planners and doing a full feasibility study but before I get too far in it would be great to have any thoughts/opinions on the above, also any other tips or resources would be much appreciated.

Start doing feasiblities before. Find some examples of the above that you want to replicate, this is easier for a residential example.
Use googlemaps or these links for SA and VIC (there’s maps for all the states just search for them)

http://maps.sa.gov.au/plb/
http://services.land.vic.gov.au/maps/interactive.jsp

Find a 3 or 4 site subdivision for some houses in a area you can afford to invest into.
use RPDATA (Yes pay for a subscription your investing $100,000’s to millions you can afford it) , look up the purchase price, the sale date, the sold date, the sale prices of that block with 3-4 homes on it,
Download the floor plans, take the floor plans to a builder ask him in rough terms how much would it cost to build including landscaping, stormwater etc.
Then using a feasibility program, something affordable is something like http://www.devfeas.com.au/
Something expensive for greater then 30 lot subdivision with mulitple land division or build stages use http://www.zavanti.com/

Go see a bank ask them the rate of interest they would lend you for a 3 dwelling development.
Research the cost of the council fees and contributions, also available online, if not ask a surveyor
Go see a town planner, get his costings
Go see a building designer, get his costings to design planning and working drawings, get him to include the energy, timber/ truss, footings, soil test.
Go to a agent in the area ask how much they would sell 3 homes for at the same time (negotiate that lower rate, lets say you get 1.5% inc gst)

Plug all that data into the program and look at the result, if that is showing up a 200k return. or 150k or 400k. There’s a strong likelihood that ohh look the neighboring property which is looking a bit derelict and run down, could also do something similar.
Go check with the town planner and ask “can i do the same as the property next door?”

And now the final piece of the puzzle, TAKE ACTION!

• This reply was modified 7 years, 2 months ago by  wilko1.
• This reply was modified 7 years, 2 months ago by  wilko1.