How do you understand your property development patch? Australia’s Billion Dollar Property Developer, Bob Andersen, shares his expert tips.
Hi everybody, Bob Andersen here. Welcome back!
I want to talk to you more about property development. You know, one of the very important things that you have to do as a budding developer is to understand your local market. Let’s just make the assumption that you’ve chosen a particular area that you want to do a development in. It could be a council area, it could be 2 or 3 suburbs—whatever it is. That’s what I call “Choosing your patch”, you probably heard me talk about that before.
CHOOSING YOUR PATCH
Once you’ve chosen your property development patch, you have to really understand what is the development potential of various blocks of land within your patch. What we’re talking about is town planning. In other words, as a developer, what can we do? Can we do a little subdivision? Can we build townhouses or apartments?
In order for you to get knowledge about that, there’s a couple of different ways you can go, some are a little bit more difficult than others. You could get a copy of the local planning scheme, and you could read it. But I tell you what, it’s not the way to go. First of all, there’s a lot of stuff to read, and secondly, it’s in town planner speak, and town planning speak is a little bit different from normal English.
HOW TO CHOOSE YOUR PATCH
What I recommend you to do is this—and a lot of my students have done it, they said it’s absolutely fantastic, this is definitely the way to go. Go spend an hour with a local town planner. Be prepared to pay him, whatever the rate is, it’s not a lot. Whatever the early rate is for a town planner, I want you to choose one, and sit down with him, and ask him a series of questions. This is a private town planner in the area where you want to do a development. So the first thing you’ve got to do, is obviously choose a town planner to sit down with.
TIPS WHEN CHOOSING YOUR PATCH
What I recommend you to do first of all, just go to the fountain of all information—our old mate, Google. Google up town planners of a particular area. Let’s say it’s Hornsby in Sydney, you Google up “town planners Hornsby”. I could tell you something, if the town planner has an office in a particular suburb, in a particular council area, I can guarantee you that that is where they do most of their applications on behalf of developers.
Google up some town planners in the area of your interest and call them. There’s a few questions that you need to ask them while you’re calling them the first time to make up your mind which one—maybe even two—is actually you’re going to go and talk to.
The first thing you’ll do is just explain and say “Hello, I’m a developer, I’m feeling new to this area. I’m looking for a good town planner, and I’m just looking around for an opportunity. Maybe, come and have a chat with you about development in this area.” And you can say, “How long have you’ve been a town planner?” That’s interesting. “I’d like a town planner to have at least 5 years’ experience.” And you can say, “How many applications do you do in this local council? Do you deal a lot with the local council?” You could say, “Have you even worked for the local council?” That could be a real bonus.
If you’ve got a town planner who’s now in private enterprise, who’s previously worked in the council, that would be a good thing, provided it wasn’t too long ago. ‘Cause some have local contacts still in the council, and I’m certain they’ll be familiar about the planning scheme. You can ask them how long they have been in business as well, as for themselves, independently.
ZONING
Basically, what you’re doing is getting a feel for the planner. You might talk to 2 to 5, and at the end of that, I want you to make a decision, just basing on gut feeling, or just how you felt from the conversation. Ring them back—ring one or possibly even two—and make an appointment to go and see them for an hour but tell them that you’re quite prepared to pay the early rate. If you do pay the early rate, it’s going to be the best money you’ve ever spent.
Get along and have a talk to the town planner. What are you going to talk about? One of the things you need to know is the different zonings. Tell the town planner, “What are the zonings in this particular council area?” They don’t need to be looking at it. “If I want to do a small subdivision, what zonings should I be looking for?” “If I want to do some townhouses, what zone?” Every council will have a different name after their zones. What’s the zoning?
LOT SIZE
The other thing is size. “Is there a minimum lot size that I need to do before I could subdivide the block or before I could build townhouses?” Even things like the width of the block, often there’s a minimum width before you could subdivide or even build townhouses. So we’re talking about zoning, size, and width. Another thing you can ask, “What are the parking requirements if I do a townhouse and even visitor parking?”
You never have to become an absolute expert, you can’t become a town planner. But it’s good to get a good feel about these basic things. At the end of the day, you can have a town planner and probably an architect that do the smart work if you’re doing a townhouse. But as a developer, it’s good to know the basic things.
BOUNDARIES
We talked about parking, we want to know about boundary setbacks on things like townhouses. How close to the boundary can I build? That’s important as well. We’ll talk about the side boundary, the front boundary, and the back boundary as well. Even things like services—the rules can vary dramatically between councils. Things like stormwater—now, if you’ve got a subdivision, or you got 8-building townhouses, you have to get the stormwater off the block.
Sometimes, if a block slopes away from the road, that one will be hard. You can ask questions like, “Am I allowed to collect stormwater into an underground tank and pump it out to a pipe, or am I not?” In some councils, you can, and some you can’t. If you can, it could be a solution to a problem. You can even say the same thing about sewerage. “If I can’t make the sewage fall by gravity to a pipe, am I be able to collect and pump it?” Very few councils allow that, some do, and it would be good to know.
Even building over those things: can you build over a stormwater pipe? In many cases you can, but in some you can’t. Same with sewerage: Can you build over a sewer pipe? In some councils you can, and some you can’t. Some of them would have an easement over the sewer pipe or stormwater pipe, and you can’t put below an easement either in most councils.
This is a range of questions you can ask the town planner just to give you a really good feel. Take note, you could record it. Ask them at the beginning, “Do you want for me to record it so I can remember it?” “Can I take notes?” “Can you refer me to some sections of the planning scheme?” The whole point of this is to get a good understanding of your local market in terms of the development potential. There’s no better person to ask than a town planner.
THE FINAL QUESTION
There’s one final question that you really need to ask them. It is an important one. “Will you be able to help me when I’m doing some investigations on potential development sites?” Of course they can help, they’re a town planner, but “Would you be able to do a little bit for free?” upfront. Say, “I’m really looking for a really good town planner. You’ve been very helpful, it’s probably gonna be you! Because of that, would you be able to help me a little bit on investigating. I’ll go as far as I possibly can, but obviously, I need you just to fine tune what I’m looking at. Is that okay? Could you do that for free for me? When we get a deal, you’ll be the town planner.”
That’s important, you need a go-to town planner, and you can use the same methodology for an architect as well, if you’re going to do some townhouses. If you’re just going to do a land subdivision, then probably the town planner’s enough. That is a great tip. I know it’s great because a number of my students have done it and have gone back to me and said, “That’s one of the best tips I’ve ever had for understanding my market.”
I look forward to catching you very shortly.
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