As demand for housing increases, property development can be a great way to make money. But how can you try your hand at property development without coming unstuck?
Before you buy a potential development site do your homework..
• Check with council to find out what the current zoning is and whether there are plans to change it in the near future…..
• You need to find out the minimum lot size that is eligible for sub-division; if your block doesn’t fit the criteria, you could be left with a very expensive purchase.
• You can make money by keeping the old house at the front of the block and building new at the back. But you’ll need to allow for a driveway and there are strict rules about the size and height of a dwelling that can be build, all of which will affect potential profit.
• If you need to knock the old house down, this could seriously affect your profit margin, so do your sums carefully.
• There are also other costs you need to consider such as legal, council, surveyor’s fees as well as the cost for service and sewer connections.
• And don’t forget the cost of mortgage repayments, while you’re waiting for plans to go through council. Look for sites with existing houses rather than vacant land, so you can rent the home out while you are waiting.
• If you’re a first-time developer, it may pay to engage a development project manager. They’ll guide you through every step of the process and save you from making costly beginners’ mistakes.
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