With greater profit potential comes greater risk so I want to impress on you the importance of being extremely diligent and engaging the right expertise to help you navigate the due diligence of purchasing land.
Sometimes we add a land component to a renovation project in order to increase the profit potential.
It’s called stacking strategies, where you add land strategy to the reno strategy and produce a bigger profit.
And today I’m going to talk about some of the areas of due diligence you need to do prior to purchasing such a block.
Hello, I’m Bernadette Johnson from The School Of Renovating, where we help women profit from their flair for creating a beautiful home to replace their income either now or in retirement.
Now, with greater profit potential comes greater risk so I want to impress on you the importance of being extremely diligent and engaging the right expertise to help you navigate the purchasing land. There are a lot of different considerations that you need to be aware of and I’m going to share some with you today but it is by no means a complete list.
Now, firstly what you want to do is look at the basic planning laws of the land to figure out whether it meets the requirements for what you’re wanting to do on a sort of a first pass basis. So things like, is it big enough? And one of the ways to do that is to go and look at the minimum lot size for a block in that area and you’ll get that information through Council or the State Planning Portal but remember if you are having to put battle axe or hammerhead driveway to access an available area of land that will add around about a hundred square meters of land to that block so it will increase the area that you need.
You also want to look at the floor space ratio. So how much building you’re actually able to build on that particular piece of land. The next thing you want to look at is all the things that you do in normal due diligence like, is it in a bush fire or a flood zone? You know that not only will impact the value of it but it’ll also impact your building costs.
Is there any soil contamination? Is it in a mine subsidence area? All that freaky stuff to make sure that you are not buying nice nasty surprises.
But then the next area of your due diligence is around the planning laws and look at the block in relation to what you’re planning to do with it. Now if you’re planning to build on the block you want to look at where the existing sewer is because while building over a sewer may be possible it’s certainly not desirable and can be an extremely expensive process so you want to avoid that. You want to look at these existing building to see whether it works in its current
location or doesn’t need to be moved and cannot be moved. So really obvious stuff.
The other thing is, does the driveway need to be moved and is there somewhere for it to go? And even though you may assess that there is that doesn’t necessarily mean you will get approval to do it. So the next step would be to actually get the opinion of a professional such as a town planner to go over all the their planning requirements for your particular strategy and make sure that that block is going to meet your needs. The other thing you want to look at is the the tax implications. Once you’re starting adding land to a reno then there’s a whole lot of different implications that come in tax wise and there are also some quite hefty fees that you will be required to pay council. So you want to make sure that you have your eyes wide open and understand fully the ramifications of purchasing that block of land.
Now in terms of minimising your risk I’d give you three things to do. Firstly, to look up the planning laws for yourself for that block of land, either go to Council or look them up on the state planning portal. Secondly, get an expert opinion from a town planner taking into consideration the strategy that you’re planning to move forward on. And thirdly, you can get a preliminary opinion from Council via a pre-DA meeting to even give you a little bit more assurance that you are going to be able to move forward.
Okay, well I hope that’s helpful and if you would like more of these video tips. Please subscribe to our channel so that you get notified every time we release the video!