While people who choose to buy existing properties as investments have their buyer’s agents, mortgage brokers, and accountants as their professional guides throughout their investment journey, property developers have their own set of “A-Team” to help them make the right decisions and ultimately succeed in the bold venture of developing properties.
Eric Brown recently purchased a warehouse in Lilyfield, New South Wales to turn it into luxury apartments—his third development project since beginning his journey in the business of creating wealth through properties. Two months after he made the purchase, the property developer has finally finished and submitted a development application to the local council.
He explained: “It's a set of plans and specifications that you submit to [the local] council that has to be … within guidelines set by the [Local Environmental Plan].”
“[If] the council then chooses to [approve], you can go ahead and build what you want to build, [but] they [also] knock you back and [have] the process continue,” Eric added.
Among the professionals who have helped him craft his application and increase the chances of it being approved are architects, engineers, town planners, and consultants.
While the Local Environmental Plan is a set guideline, some developers tend to push the boundaries a little bit to accommodate their preferences. Good architects come in handy for a little rule-bending.
Eric said: “Sometimes … [the] council will let you get away with one or two things that are outside the scope or pushing the rules or the boundaries a little bit—that's where fantastic architects come into play.”
“They can fight for you on certain things that you want to get through like your floor-to-space ratios perhaps, or other items like that,” he explained further.
Having someone who can articulate your plan well can help increase the chances of having your development plan approved by the local council.
The property developer’s advise for people looking into the same strategy: “Don't just pick the cheapest architect, pick someone that's going to fight with you because these processes can get held up in council.”
“I've learned through experience [that it is important] to have someone by your side that stands up and actually fights for your cause and can articulate in architectural language what the council wants to hear.
“It made a massive difference to the things I've done in the past,” he added.
Having a town planner on your team will help you get a good grasp of what the local council requires in order to approve a development plan. After all, it is literally their job to assess the development plans submitted to the council.
Part of Eric’s submitted development plan is a town planning report that will serve as an all-encompassing answer to most of the council’s possible objections.
According to Eric: “The town planner at the council will assess it. With my latest development, I have engaged a [separate] town planner to back up the architect and it's been very good.”
“The rules are the rules but there is a bit of flexibility if you are able to make some compromises,” Smart Property Investment’s Phil Tarrant said.
Like the architects and the engineers will also serve to strengthen your proposition to the local council.
Phil said: “With very good architectural drawings, engineering plans, all this sort of stuff … [and] documentation … [can steer you] through council as quickly and easily as possible.”
If you want to go above and beyond in ensuring that your development plan gets approved, you may also enlist the help of different consultants. Some of the consultants in Eric’s team are an acoustic consultant, a traffic management consultant, and a contamination consultant.
He explained: “We're under an R20 to 25 flight path, so we needed an acoustic consultant. We engaged a very good one with that.”
“Shop around ... There's such a different level of expertise for these consultants,” the property developer added.
Private equity funder
Property development is undeniably more risky than most strategies in the field of property investment, so it will always do an investor well to sort out his finances as soon as possible. Eric is paying 10% interest on his property through a private equity funder so he could “come off as quick as [he] can”.
According to him: “[It’s] double what you would expect to pay. That's hurting a little bit … [and if you’re not] aware of that or you ran into it on a fine line in terms of funding, it could really trip you up.”
“I would want to try and resell a property that had a council stop work order on it and was incomplete, a commercial property that you're trying to change into residential, so you really want to have your funding in line first,” he explained further.
Do your research
Eric believes that there’s definitely no harm in being “over-prepared, overplanned, and over-documented” when preparing for a development project.
Before you can even proceed to the actual building process, you have to convince the council to be in favor of your development plan.
Having a good team to guide you through the process will not only help ease the stress of the venture but also ensure that you stay on the path towards success.
Eric said: “[It] pays to do your research and it pays to get someone you trust or someone who's worked for somebody else and done a really good job.”
“Having them beside me, next to me, when we fight this through council is really reassuring. I think I'd have a few sleepless nights if I didn't have this team behind me to help me,” he concluded.
Tune in to Eric Brown’s episode on The Smart Property Investment Show to know more about how his most recent purchase of a warehouse is performing two months on.