Top tips to help with sub­di­vi­sion

Joondalup Weekender - - Residential -

RE­ZON­ING in many ar­eas of­fers the op­por­tu­nity to buy a block, sub­di­vide, build and sell the new homes. It also al­lows many home own­ers to sub­di­vide their block and build be­hind their cur­rent home. Th­ese types of de­vel­op­ment suit a smaller in­vestor, who can work with fam­ily and friends if they wish, and can be prof­itable, but they also come with risk. As­set­build spe­cialises in triplex, house-be­hind-house and multi-unit de­vel­op­ments and direc­tor Kevin Bishop of­fers the fol­low­ing ad­vice to help you achieve your goals, profit from and en­joy your next prop­erty de­vel­op­ment. Do your re­search

Seek ex­pert ad­vice be­fore pur­chas­ing a de­vel­op­ment site that does not al­ready have ap­provals in place.

I rec­om­mend ex­plor­ing all pos­si­bil­i­ties prior to mak­ing an of­fer for a site, or if that is not an op­tion, be sure to in­clude a due dili­gence clause in the con­tract.

This will en­able you to se­cure the prop­erty, while main­tain­ing a get-out-of­jail-free card in the event it fails the due dili­gence test. Con­sider the ti­tle you will cre­ate

There are of­ten two or even three ti­tle op­tions for ev­ery de­vel­op­ment: green ti­tle, sur­vey strata ti­tle and built strata ti­tle.

Each has its own set of costs and im­pli­ca­tions, with the cheap­est so­lu­tion not al­ways the best.

The crit­i­cal path of your de­vel­op­ment will cer­tainly be closely linked to the ti­tle strat­egy, so make sure you are ed­u­cated enough about each pos­si­bil­ity. Speak to a va­ri­ety of peo­ple

There are var­i­ous stake­hold­ers in­volved in ev­ery prop­erty de­vel­op­ment and all have their own spe­cial­ity and agenda, and they fre­quently seem to con­tra­dict each other.

For ex­am­ple, coun­cil ad­vice is of­ten con­sid­ered by the layper­son to be con­clu­sive, but in fact that is very far from the truth.

I have seen sit­u­a­tions where an in­vestor has pur­chased a prop­erty based on coun­cil ad­vice that it was a triplex and could only achieve du­plex, and I have also seen the op­po­site.

Real es­tate agents may rep­re­sent a prop­erty for sale as sub­di­vis­i­ble STCA (Sub­ject To Coun­cil Ap­proval) but there may be forces other than coun­cil at play who may take a dif­fer­ing view and in some cases over­ride the opin­ion of coun­cil.

Builders, and usu­ally big-name builders, are gen­er­ally the other pre­ferred source of ad­vice for the in­vestor and this also is not, in my opin­ion, the ideal start­ing place. Of­ten you deal with a sales­per­son, who has ex­cel­lent sales skills, but gen­er­ally a limited amount of sub­ject mat­ter ex­per­tise out­side of the typ­i­cal project favoured by their em­ployer.

Seek ad­vice from a third party that has you as its pri­or­ity, rather than the in­ter­ests of their em­ployer. Choose a builder that will work closely with you

Big­ger builders are also gen­er­ally fo­cused on tak­ing on work that suits them, so their ad­vice will al­ways be skewed to­wards the type of prod­uct that they would like to build.

I rec­om­mend choos­ing a small to mid-size builder, as they will al­ways of­fer a su­pe­rior ser­vice from start to fin­ish and no mat­ter the scale of your project, you will be known by name, not your project num­ber and you will be deal­ing with the builder di­rect.

Only work with a builder that is will­ing to pro­vide you with con­tact de­tails of the su­per­vi­sor and con­struc­tion man­ager; is­sues are re­solved more quickly and the mes­sage does not get di­luted. Avoid hid­den costs and sur­prises

While there is a de­gree of pro­tec­tion to be found within the HIA con­tracts, items listed as pro­vi­sional sum (PS) are where the risk lies.

Many larger builders ap­por­tion more than 20 per cent of the con­tract price as PS and that price can vary at the builder’s dis­cre­tion and you have lit­tleto-no say about it.

Avoid PS un­less ab­so­lutely nec­es­sary. Get ex­tra help

Some of the more suc­cess­ful first-time de­vel­op­ers I have worked with over the years have en­gaged with project man­agers who are sub­ject mat­ter ex­perts and not only pro­vide un­bi­ased ad­vice but also make huge gains in time (and stress) man­age­ment.

In prop­erty de­vel­op­ment, you will of­ten find your­self jug­gling a lot of balls and you only have two hands.

Do not be afraid to seek a help­ing hand; it is in­ex­pen­sive and of­ten cost-neu­tral due to the sav­ings that can be achieved and will likely prove to be one of the best in­vest­ments you make.

The right ad­vice can help make your prop­erty de­vel­op­ment a suc­cess.

Kevin Bishop

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