In his latest installment of “Tips & Tricks for Developers,” Dean Parker shares his five critical steps of site acquisition – from submitting an offer subject to due diligence to making a decision on whether or not to proceed with the purchase.

Video Transcript:

Hi. Welcome to the latest PropertyInvesting.com video blog. Today I’m going to talk about site acquisitions. Our business, “Your Style Homes”, operates out of Brisbane, up here in Queensland. Today I’m standing in Newmarket, in front of a site that we’ve just acquired.

I’m going to summarize this into five steps that we follow: from signing a contract with a due diligence clause, through to actually proceeding with that contract.

The first step is to talk to our town planner. He’s the first person that we would call when looking at a site like this. He will do a desktop analysis and identify any risks and issues with a particular site. He’ll do all of the searches. He will check for easements. He’ll check for the planning zones. He’ll check for anything relating to the site, and let us know so we can make decisions from his report.

He’ll also ensure we can get storm water in and out of the site, and check that sewer is available. All of those sort of issues, he will go off and address those. He will also then advise us of any items we need to prepare in our plans, which takes us to step two.

Step two will be talking to an Architect. We’ll get the feedback from our town planner, and then create a basic mud map of what we can achieve on the site. There is no real detail of the internal of the dwellings at this time, so it’s really just high-level boxes with a layout of the apartment or townhouse we want to build.

Then, there is a whole heap of other details we need to work out to meet the town planning requirements. For example, that will include setbacks to boundaries, car-parking allocations, making sure our drive ways are wide enough, and whether we can get the bins on the site, or if they will be on the street.

There is a whole league of town planning issues that we need to address. As I said, this is initially just a mud map of what can be achieved on the site, and from there we can work out our yield. The yield means how many apartments or townhouses can we fit on that particular site.

Once we’ve got that, we can then talk to builders or a quantity surveyor about working out some basic numbers around construction, giving us a reasonably good idea of what that particular building will cost to construct.

Once we’ve got all of that information, then we go back to our town planner. We get him to review all of those plans and assess whether we can actually do it or not. He’ll then identify the risks. Up here in Brisbane they call it either “impact assessable” or “code assessable.” If the town planner says its “code assessable,” we’re basically ticking all of the boxes, and can proceed. If it’s “impact assessable,” we’re not ticking all the boxes and we’ll need to negotiate with council on some of those items.

Now that we’ve dealt with our town planner, our architect who has drawn up our plans, and the builder to get some pricing, we need to come up with a feasibility report. We’ll put all of those numbers into the feasibility, we’ll identify our acquisition costs, and all our other costs associated with the build, any council fees, any holding costs, any selling costs, any marketing costs. We’ll put that all into a feasibility analysis, which will produce a number at the end – the profit that we can make. That number needs to be around 18 to 22 percent for the projects that we’re doing.

If we can tick that box, the last step really is just making a decision on the project, whether we’re going to proceed or not.

To summarize the five steps… Step one is talk to your town planner. He will identify risks of the site. Step two is talk to your architect to get some basic plans done; a mud map. Step three is to talk to your builder to make sure you’ve got your construction prices sorted and that you can build what you’re proposing.

You then get all those people together and be sure that you’re happy through those first three phases. Step four is prepare your feasibility. Make sure your numbers stack up. Step five is to make a decision to either proceed with the contract or walk away.

You must make sure that you do these five steps really accurately. There is no point getting into a contract, and then figuring this information out and being stuck with a lemon.

Due diligence is really the most important process in any development. You make your money when you buy and obviously this stage is where you avoid all of your mistakes. You must make sure you cover everything off.

I hope you got some value out of this update. I’ll see you on the next one.


This transcript has been edited slightly to improve readability.

The post Tips & Tricks For Developers: 5 Critical Steps of Site Acquisition appeared first on PropertyInvesting.com.

In this video, professional developers Dean Parker and Martin Ayles discuss one of Martin’s recent deals and how he financed it.

Video Transcript:

The post Tips & Tricks For Developers: Overcoming Finance Challenges appeared first on PropertyInvesting.com.

The Australian Bureau of Statistics (ABS) released property price growth data last week, and home prices grew 2 percent over the June quarter across Australia’s capital cities. Over the same period, Sydney property values jumped 2.8 percent, Melbourne is up 2.7 percent, and Brisbane values increased 1.1 percent. Over the twelve months ending in June 2016, Brisbane property prices actually increased more than Sydney.

Once the data for the September quarter is released, we’ll likely see even higher numbers, perhaps up to 4 percent additional growth for Melbourne and Sydney homes. With no sign yet of a slow down over the December quarter, many investors are scratching their heads, wondering how much higher property values can go.

It stands to reason that at some point soon home price growth should flatten, as values keep pushing the boundary of affordability. Rather than speculating on continued capital growth, some investors are turning to more active, manufactured growth strategies, like renovation, subdivision, and development.

In this post, we introduce Dean Parker, a developer in Queensland, and a friend of PropertyInvesting.com. We’ve asked him to share with you some of his insights and wisdom that he’s acquired along the way. Keep your eyes out for more posts from Dean in the coming months.

Video Transcript:

Hi, I’m Dean Parker and I’m the managing director of Your Style Homes. In the coming months, I will be hosting a number of video blogs for the PropertyInvesting.com community.

I’ll be talking to you about the day-to-day challenges that we face in our development business and how we overcome them. My hope is that you will be able to pick up some helpful tips and tricks along the way. Really, these are just everyday issues that we come up against that require us to think on our feet and find solutions to.

To start with, I’ll give you a brief introduction of what we do. We’re a development company in Brisbane. We’ve been up here since 2011, but first began operating in Melbourne.

We now focus on townhouse and apartment projects in the Brisbane area. I’m standing now in front of a townhouse project we’re just completing in Coorparoo in Brisbane. There are eight luxury townhouses here, with city views. It’s a beautiful development.

As part of this project, we’ve been able to retain an existing Queenslander that sat right at the back of the block there. We’ve moved it all the way forward to the front. We’ve refurbished it, split it in half, and turned it into two townhouses. We’ve also built six brand new townhouses around that original Queenslander.

At this point of the project, from our point of view, we’re aiming to deliver a really high quality product to our purchasers. We’ve actually sold seven of the eight townhouses off the plan. We really want to make sure that when we hand these properties over that they’re of high quality and that the owners are extremely happy.

We could go and actually do our own defect checking and then give our feedback to the builder. We would do that at a high level just to make sure all the colours are right, the tiles are right and the fixture and fittings are okay.

But what we’re doing because we’re dealing with bigger projects – really, you could do this on any sized project – we’re employing a third company separate to us and separate to the builder to do our quality assurance check.

In this case, we’re using handovers.com, but there are plenty of other companies you can use out there that do a similar thing. Essentially, the process from here is the builder issues their practical completion to say that they’ve finished works, and then we get our independent company in to do a full inspection.

They’ve already been in for the first inspection two weeks ago and found 800 defects. That’s how thorough they are. They know the building code. They know what is a defect and what isn’t a defect. Any tiny little thing they find, they list it.

They basically get all this information to us on one really helpful spreadsheet. It lists the room, the defect issue and then the trade that they think would be responsible for fixing it.

We get that full list, then we give that to our builder. It’s a really easy process then for the builder to fix it. They print it off, they give it to their site supervisor, he goes through it, issues it all to the trades and then they simply work through the list.

Today, we’ve got our independent company back here again, now doing the second inspection. Hopefully, they’re in there behind me ticking all these items off, and we can then finally give the builder our final handover certificate to say that we’re happy with the product that they’ve delivered.

The challenge on this site really was to deliver a high quality product. Now, we’re not builders. We’re a development company, so I don’t really know the ins and out of every little building code that’s out there. That’s why we’ve got this third party company to come in. They know what the rules are.

The other great thing about this is they’re the meat in the middle of the sandwich. It’s not us being particularly difficult with a builder. It’s an independent company. Really, we’re just the conduit between the two.

The way that we’ve solved our problem here is to get this independent company in. They take away a lot of the headaches. It means that instead of us rushing around trying to do this defect processes ourselves, we can now deliver a really high quality project knowing that an independent company has done a full inspection and that we’ll get the project delivered on time and with a great finish.

I hope you got some value from our first video update. We’re looking forward to working with the PropertyInvesting.com community and delivering a lot more tips and tricks over the next few months as we progress through the projects we’re developing up here. We’ll see you soon.

This video transcript was edited slightly for readability.

The post Tips and Tricks for Developers: Third-Party Quality Assurance Checks appeared first on PropertyInvesting.com.

This simple strategy significantly boosted the overall yield of their existing investment property. Depending on where you live and invest, you might be able to do the same.

What Is A Granny Flat?

Traditionally, granny flats were just for grannies and grandpas. But due to the explosive growth in Australia’s population, many local and state governments are relaxing granny flat restrictions to meet the demand for affordable rental properties.

This presents opportunity for investors like you to maximise your income potential by getting creative and thinking outside the box.

In general, most local governments use specific criteria to classify a structure as a granny flat. A granny flat must:

• Be self-contained, having its own separate access, bathroom, kitchen, bedroom and living area.
• Exist on the same title, with the same ownership, as the main residence.
• Reside on residential property and not on property used for commercial purposes.
• Be limited to only one granny flat per property.
• Sit on a traditional Torrens title, not a strata or community titled property.

But just because you can build a structure to meet these basic qualifications, it doesn’t mean you’ve got an instant income-generating machine at your disposal. Not every state is granny-flat-friendly.

Granny Flat Laws Vary From State to State

If you live in South Australia, Victoria, or anywhere in Queensland except Ipswich, I’ve got bad news for you. Your state’s granny flat laws are very inflexible. You’re welcome to build a second dwelling, but if you rent it out to someone who isn’t a household dependent, then you’re breaking the law. Your primary takeaway from this article should be to lobby your state government to loosen this restriction.

However, if you live in Australian Capital Territory, Northern Territory, New South Wales, Tasmania or Western Australia, congratulations, you actually have some land ownership rights – pardon the sarcasm. You can build an extra dwelling, and then use it to earn rent from virtually anyone who will pay you.

Here’s a breakdown of the basic granny flat requirements for each State:

Be sure to check with your local council for site-specific details related to setback, floor to ceiling heights, energy efficiency and other requirements. You’ll also want to confirm that the above information has not changed since the time of writing. Many of these standards are recent changes, and some are currently under review.

What Type of Granny Flat Should You Build?

When most people think of a granny flat, they think of a detached dwelling. But there are multiple ways to meet the qualifications of building a self-contained unit.

1. Convert Your Garage

This is potentially a low cost option, as long as the slab and frame are structurally sound.

You’ll need to have the building certified by a structural engineer to meet compliance requirements.

The down side is that this is the most restrictive option since you’re essentially creating a home from a square box. You’ll also need to sort out a plan B for covered parking.

2. Convert Part of Your Existing Home

This can also be a low-cost option, because it involves making internal changes to the existing structure.

Simply adding an unobstructed external entrance and building a small kitchen and laundry could be enough to add a second self-contained dwelling. Bear in mind that some floor plans will be more conducive to this strategy than others.

3. Build an Extension Onto Your Existing Home

This strategy involves extending the existing structure to create new rooms to form a new, self-contained dwelling.

Depending on your plans, build costs can blow out quickly, as you may need to make structural changes to the existing home to ensure its integrity.

4. Build a Detached Granny Flat

This is the traditional approach and involves building a new separate dwelling on the same block of land as your main home. This provides a greater feel of independence for the proposed tenant, especially if you build it on a larger block. A detached unit also offers the flexibility of giving the occupant some private garden space.

A low cost solution might be to purchase a kit home, which could range in price from $25,000 to $50,000, or more.

Keep in mind that this doesn’t include the internal fit-out, such as the kitchen, bathroom, laundry, carpet, electrical, plumbing, drainage, tiles and painting. You’ll also have to sort out the on site labour and construction.

If you want the new dwelling to have a certain look and façade, perhaps to match your existing home, you can have it built from the ground up the old fashioned way. Many quotes float around the $100,000 mark.

5. Build a Dual-Living Dwelling from Scratch

There are some smart builders who takes advantage of the generous New South Wales granny flat legislation by offering dual-living floor plans built from scratch.

These dwellings look like a traditional single family home from the street, but actually contain two separate units. One is a three-bedroom and the other is a two-bedroom, both with single bath and single car garages.

Depending on inclusions, you’d be looking at a build cost of about $300,000 or more in today’s market. This doesn’t include the land component. Your accountant would probably also be quite excited by the depreciation benefits.

Where Should You Start?

1. Consult Your Local Council. Be sure you’re clear on the minimum lot standard, the maximum dwelling size and all other requirements for granny flats in your state and suburb.

2. Assess Rental Demand. Talk to local rental managers and ask for a rental appraisal – not only for your new proposed dwelling, but also for your existing property after the granny flat is complete. You must be confident that your new one-or two-bedroom unit will be easily tenanted. You should expect a rent below other one-or two-bedroom units in the area that may have a more desirable living space. Alternatively, you could consider renting out your secondary dwelling as short-stay accommodation through a platform like Airbnb.

3. Assess Cost And Potential Value. Contact several qualified and trustworthy builders to bid on the construction of your new granny flat. Be sure to factor in all potential costs, including plumbing and sewer, utility connection and council fees. Many builders will be able to provide a turnkey solution.

Next, contact an agent to appraise the value of your entire property after the project is complete. Ask for a valuation that considers both the investor market and the owner-occupier market.

4. Crunch The Numbers. Make sure the deal stacks up. Although your primary concern is cash flow, your secondary consideration should be the impact of adding a granny flat on the overall value of your property. If you’re not sure how to do this, read From 0 to 260+ Properties in 7 Years.

5. Secure Council Approval. Once it’s time to move forward, before commencing construction, you’ll need to secure development approval. In granny-flat-friendly states, you can do this in as quickly as 10 days.

You’ll need to submit architectural plans, specifications and associated documents with your application. You’ll need a qualified draftsman and possibly an architect and planning consultant, as well.

A word to the wise: Don’t attempt to bypass council approval. If you’re converting a garage or an existing home, you might be tempted to try to fly under the radar and take the easy path. But failure to obtain the necessary approvals prior to construction is an offence in every state and carries heavy fines. If you rent out an unapproved dwelling, you’re exposing yourself to a civil lawsuit and possibly even criminal charges if something goes wrong.

6. Engage Your Builder. You might find it helpful to engage your builder before applying for council approval. Many experienced builders will already have a system in place to manage the compliance process for you.

If your project doesn’t require the skill of a builder, you might be able to supervise the project on your own. Just be sure you’re aware of all compliance issues and you know how to manage your team well.

Potential Granny Flat Pitfalls

As with any property investing strategy, you need to be aware of the potential pitfalls of building and renting out granny flats.

1. You Might Need To Find New Tenants. The tenants in your existing property might not like giving up part of their backyard in exchange for a new neighbour. You’ll need to give them notice of your intentions and make provision for them to move out if they so desire.

Because your existing property will likely have a lower rental value after adding the new dwelling, you could offer to lower the rent in hopes that your tenant will be willing to stay.

It may also be useful to offer a rental discount during the construction phase to compensate them for the aggravation. Either way, it would be wise to budget for a period of vacancy.

2. You Might Find It Challenging To Sell Your Property Down The Road. The value of your property is directly related to its demand in the market. It’s like this expert says, “Who wants to buy a granny flat property? It has to be a buyer who doesn’t mind someone else living in their backyard and the various annoying behavioural traits of each new tenant. That buyer probably is not a young family, a baby boomer or a young professional couple.”

When it comes time to sell, your target market will primarily be investors, or maybe secondarily creative-thinking first-home buyers without kids. The largest market is made up of people who just want a place for their family to live.

3. You Could Face Some Legal Hassles, Even If You’re Only Renting To Granny. As these people learned the hard way, even our closest relationships can break down. Be sure to always enter into a clear legal agreement with all tenants – even if it’s family.

Have You Owned a Granny Flat?

If you’ve built a granny flat or currently own a dual-living property, take a moment to leave a comment and let us know the good and the bad. Regardless of your experience, there’s likely something others can learn from your story.

The post Build a Granny Flat to Boost Your Property’s Cash Flow appeared first on PropertyInvesting.com.

Are you a budding Bob or Betty the builder? If so then you may be interested in the possibility of making money with property developing.

What Is Property Developing?

In a nutshell, developing real estate involves taking a property as it is now and performing strategic improvements to realise a gain by harnessing a higher and better use of the land and / or building.

Normally a development implies a new use for the land, or new structure (or part structure). That is, taking something in a raw form and improving it.

It is a moot point whether renovating and subdividing fall under the definition of development. We have decided to treat them separately.

When developing real estate, investors often acquire a property with an existing house on it and seek to enhance the use of the house and / or the land the house was built on.

A very common example is what is known as a ‘battle axe’ or ‘dual occupancy’ development where the existing house is retained and one (or more) dwellings are built at the rear. In this situation the house at the front is also usually renovated.

Alternatively, another approach to property developing is to acquire vacant land and develop it by constructing new homes upon it. Perhaps you have heard the term ‘spec home’ or ‘spec builder’? These are developers who build new homes, usually in new land subdivisions, to specification and speculate on selling them for a profit.

Of course the only difference between an existing house and a vacant block of land is the existing house, so another common strategy used by developers is to demolish and rebuild, especially in areas where houses have become obsolete whereas land values have appreciated (such as in subdivisions in metro areas constructed in the 1950’s, 1960’s and 1970’s where such houses are not desired, whereas the land they are built on is).

There is much to learn as a budding property developer, and you are well advised to invest in detailed and structured training from an experienced investor before beginning.

Nonetheless, to help you on your way, here is an analysis of what are know the Five P’s Of Property Developing’.

5 P’s Of Property Developing

#1: Planning

In most jurisdictions, in order to construct a dwelling (or for that matter, to potentially improve it in any way at all) you will need one or more permits. A permit is permission from the appropriate authority to proceed, and will usually only be given if the proposed development is within planning and building guidelines (often called ‘codes’).

As a developer, two permits you will need to become familiar with are:

1. Building permit – a permit sought from the appropriate local government authority to construct a new dwelling, or in some instances, substantially improve an existing dwelling.

2. Planning permit (also known as a ‘DA’ or ‘development application’) – a permit sought to develop or use land for a particular purpose.

Generally, if you are building anything you will need a building permit. Furthermore, if you are planning to sub-divide or change the use of the land, then you will need to first obtain a planning permit too.

Be aware that permits can take a long time – sometimes many months and maybe even years!

It’s an obvious conclusion then that before contemplating a development you must research the building and planning regulations in the area you plan to develop to make sure you are allowed to do what you plan on doing!

#2: Product

Product refers to the type of dwelling that you plan to build, and to make sure that product is suitable for the parcel of land you are building on, the area, and most importantly of all, for the person you expect will want to buy it.

It is essential that you accurately price the potential product (see below), otherwise any profit you make will be pure speculation and your investing extremely high risk.

In order to price construction you can either obtain a quote from a builder and have them build it for you, or in some jurisdictions you can apply to be an owner-builder and manage the construction yourself.

Be sure to cut the cloth to suit, which means be careful not to over or under capitalise or else you may find it difficult to sell within the price and time budgets you hope for.

You definitely want to spend time browsing spec homes for sale in new housing developments in order to gain an appreciation for modern trends in style, design and pricing.

#3: Person

Before rushing to buy and build, first research who you think will buy the property, why, and for how much.

A potential buyer is known as your ‘target market’, and the more you can find out about your target market’s buying preferences and behaviour, the higher the likelihood you’ll make a profit provided you can meet (and ideally exceed) those expectations in a cost effective manner.

Talking with local real estate agents is a must to gauge what product is popular, for whom, and at what price.

Another good idea for researching what people are buying, and what prices are being paid, is to get hold of comparable sales data and to drive around the suburb looking at the style of property that is in demand and the features included in that housing product.

#4 Price

In many ways you need to start with your end sales price, deduct your building, holding, purchase and sale costs, as well as your desired profit, in order to arrive at your maximum purchase price for the raw product.

Most developers recommend a minimum return on investment of 20%, as that is a sufficient safety margin to fund cost overruns and delays.

#5 Place

Clearly, the location where you develop is very important. You need to choose a location where the product, person and price all align to allow you to make your desired profit.

If you can’t find a location where the numbers work, you need to revise your inputs if possible, and if these are already ‘bare bones’, then seek an alternative location or else choose a different investing strategy.

If your profit is predicated on future price growth then you are speculating, and that adds significant risk to your investing.

Let’s now discuss three specific tips for investors new to developing.

Tip #1 – Deep Pockets

Developing is a cash intensive endeavour.

For instance, construction finance is an unusual product in that if you qualify for a 70% loan, it is the last 70% that a lender usually provides as opposed to 70 cents in each construction dollar. In other words, you need to come up with the first 30% from your own cash reserves.

For instance, if a new home was going to cost you $300,000, you would need to fund the first $90,000 from your own sources, and the lender would fund the final $210,000.

Furthermore, not all expenses will be financed which means you need to pay 100% of such costs.

Then there are the interest costs that, if not capitalised, must be funded from somewhere.

All the while development projects deliver little, if any, income as any pre-sale proceeds are quarantined until after completion.

Many a developer has gone bust mismanaging their cash flow, so beware!

Tip #2 – Be Strategic

If you see a development you like, chances are the plans are lodged with the local council and are therefore on the public record.

For a small fee you should be able to get a copy of the plans and be able to ‘borrow’ ideas and building concepts from them for your own purposes.

This can save you a small fortune in design fees, as well as provide ideas for the size and layout of homes

Tip #3 – Google Maps

Google maps has a very handy feature that allows you to see the land boundaries. While there is no guarantees they are exact, they are still a good starting point to see what previous sub-divisions have been approved, and what are the street addresses to enquire about with the local council if you would like a copy of the plans below.

Consider this screenshot:

It seems 7A Marama Street is a sub-division of the original land parcel at number 2 Gissing Street. Furthermore, 9A Marama Street appears to be a sub-division of number 1 Gissing Street. Clearly this area has potential development approval.

Property Developing Summary

There’s no doubt about it… developing has made many investors large sums of money. Of course, many others have also lost a fortune by being on the wrong end of a speculative development deal gone bad.

Armed with appropriate education, a large dose of common sense, and a conservative mindset (rather than being greedy), many of the risks often blindly accepted by those who don’t know better can be mitigated or managed to acceptable levels.

The post Property Developing appeared first on PropertyInvesting.com.

What do I need to know before I begin a subdivision?

How do I get approval for a subdivision?

Preparing for subdivision

The post What you must know when subdividing property appeared first on PropertyInvesting.com.

Property investment often goes hand in hand with construction – whether you are developing a building to sell or renovating real estate to add value, chances are that you will require specialised work to be completed on your property.

While DIY can be a cheaper option, if you do not have the particular skills or knowledge to perform the work correctly and efficiently, you could jeopardize the value of the project. .

Or perhaps you simply do not have the time to carry out complicated renovations when you have other responsibilities you must attend to.

Whatever the reason, it is best to start networking effectively and making good industry contacts along your way and asking friends, co-workers and relatives for recommendations of great tradesmen.

As you may have discovered, excellent contractors can be few and far between. And shoddy workmanship can cause delays and cost thousands.

Preparation and foresight can go a long way toward getting you where you would like to be from an investment perspective.

When you recognise good skills in a particular company or contractor, it is important to foster a great professional relationship by paying a fair price and endorsing their services to others. This is when effectively networking to increase yields come into play.

Looking for the bigger better deal and making choices purely based on price will likely cost you more money in the long run.

And as you begin to make a name for yourself in the construction world, it fast becomes apparent the way in which you carry out your business while effectively networking to increase yields.

A positive rapport with contractors, tradesmen, production workers and so on will not only help you to have a professional network of people to hire and to rely on, it also makes for a more efficient and profitable long-term working scheme.

Effective networking, great workmanship and efficient timelines lead to faster turnaround times and the potential for higher returns.

The post Networking to increase yields appeared first on PropertyInvesting.com.

The fact is that council planners and elected councillors often sit on opposing sides of the fence.

Planners exist to follow local planning schemes, instruct developers on meeting local planning and development overlays. Council planners aim to create sustainable townships and cities in which approved development meets ResCode, adds to the local character and creates a pleasant living space for all residents.

Elected councillors often have no planning experience, no development experience and in suburban areas undergoing change, little understanding of the amount of work, time and money that is expended both by local and state government as well as developers attempting to gain approval for new housing developments.

Often politically motivated, emotional decisions rule the day in a council meeting. “He said, she said” arguments and political posturing take the place of facts and cool-headed thought processes.

And in a council made up of just 9 elected councillors, those 9 people can decide the fate of your property development.

A property developers’ role is not to antagonise the local council. It is not to deliberately create stress or hardship for neighbours. A property developers primary goal and role in the community is to create new housing on the land that they own, and create a profit as a direct result of this higher and better use of land.

Take the current Victorian planning scheme, which is currently under review by the Planning Minister Matthew Guy. Under the local council planning procedure, you must apply for a Planning Permit.

This can take several months in which a pre-planning meeting is held with council planners, requests for further information are handled by both sides, and finally an indication of whether council currently anticipates refusing or granting a permit.

Objections can be lodged by neighbours and even interested parties from suburbs many miles away during this time. A developer can be reassured by council planners that their application will be approved, however with a highly charged, politically minded elected council this reassurance means nothing.

Even if the council planners are recommending that council approve the development, elected councillors can decide to refuse the development.

An application can be refused on many grounds such as loss of amenity for neighbours or on neighbourhood character. And if you have ever been to a council meeting where the residents and elected officials are having a political stoush, the development applications being heard can be written off in a matter of minutes.

This is not always the case, with many smaller residential developments easily moving through the process relatively unscathed. However for the medium developments such as 5 or more dwellings the elected councillors also have ‘call up’ items.

Developments such as a 5 townhouse project on a block can be called up, and these can then be rejected even if council planners are recommending them to be approved. This is where VCAT comes in.

Essentially in Victoria when a development is rejected, an applicant has the chance to appeal the decision at the Victorian Civil and Administrative Tribunal. Submission from objectors can be heard and local councils stand on the matter will be heard.

This is not a rubber stamp approval for developers, neither is it a sure thing for councils to have incorrect planning decisions upheld.

Planning in the most part is quite black and white. While the neighbourhood character and overall look of the building can be subjective, whether the development fits within the planning scheme and ResCode is objective. The development must meet all criteria before it has a chance of being approved at VCAT.

To be successful at VCAT developers must not just convince local council once, but for a second time before then proceeding to VCAT. The current planning systems allows for the developer and council planners to meet and work through the issues that saw the application refused in the first place.

In a highly political area, the developer must tread carefully and work with council the second time around prior to heading to VCAT. The local council position will then be heard again by the elected councillors. This sounds familiar.

This process can eat up years in a development, meaning cost blowouts of $1000’s. When the case is heard at VCAT this second round of ground work can mean that the council is now happy with the application and may be supportive to the development. The reality is the developer still must go to VCAT. This wastes at least $10-$15,000 on the part of the developer and the same again on the side of the council.

Developers need to have a firm understanding of how local council works, how the local residents are reacting to proposed development in the area, and how the council, planning system and the state policies will affect a development. Every developer must be aware of the politics inside the council and the 9 people who can decide the fate of your development.

Dianna Wolfe is a passionate property developer and renovator. She and her husband, Lee, run their property development and home staging company, Red Door Residential, in the metro area of Melbourne. To find out more about Dianna Wolfe or the home staging services Red Door Residential provide you can check out their website, www.reddoor.net.au

This article is written as a general study of what may happen as part of the planning phase in a property development. If you have questions concerning a specific property development you should seek advice from the relevant authorities, legal and accounting experts.

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There are many factors that influence the success or failure of a particular property investment venture – including economic viability, market conditions, location – and the effectiveness of the city planning system.

Deciding where to put your effort and energy could be the main facet of your investment that determines potential future returns – and should therefore be selected with caution.

Transportation networks, proximity to services, and general mobility all affect tenant demand, and a poor city planning system can limit the attractiveness of your property if it is chosen incorrectly.

Fortunately, there have been recent efforts to improve city planning in Australia – a move that could bolster long-term investment profitability.

The Property Council of Australia (PCA), the Residential Development Council (RDC) and the Council of Australian Governments (COAG) announced the release of the COAG Reform Council’s Capital Cities Strategic Planning Systems Review – the foundation for the anticipated change.

PCA chief executive Peter Verwer spoke of the positive effects of such a movement – including increased liveability – and stressed the importance of the development.

He said: “Cities provide the surest pathway to sparking a productivity super cycle in Australia.”

As the review revealed that not one jurisdiction met the criteria adopted by COAG, the RDC is determined to inspire changes to reverberate through all facets of development.

Residential Development Council executive director Caryn Kakas said the current system is flawed and must be corrected due to its integrated layout.

“The links between housing, employment opportunities and infrastructure are key features of strategic planning for our cities,” she said.

The committee also recommends moving fast on the project by developing specific goals.

“The next COAG meeting should commit to a process that will set performance targets for cities,” Mr Verwer said.

Property investors may benefit from monitoring the progress of the new planning initiative as it may affect future ventures.

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