Scott's Weekly Column

Get expert advice first

When talking with owners who are selling a property that is zoned to allow units/townhouses built on it or land that can be subdivided into residential blocks of land, we often hear the question, “How much extra can I get for its future potential?”

Future potential is exactly that, unrealised profit that you may get in the future once the property is developed. If you are one of these property owners you really have two choices: to continue to own the property until the potential is realised by developing it yourself, or leaving some of the “potential” in the property for the next owner/developer who will be assuming all the risk.

An astute developer will be able to work out the potential selling price for the end product, then deduct council contributions, development expenses, building, finance, marketing and holding costs, and factor in a profit margin (acceptable risk is 15-20% over two years). Once this has been accurately calculated they can then work out what price they can pay for the development site or englobo(undeveloped) land parcel and calculate the potential risk.

Unfortunately, over the past 30 years I have seen many “first time” developers who don`t do their homework properly and pay “overs” for a development site and end up going broke. I`ve also seen many property owners undertake a development of their own land or development site and end up making nothing.

At Nolan Partners, we have a highly experienced team who with a proven track record who can advise you on the real estate aspects and put you in touch with local expert professionals who can walk you through the whole development process before you make a decision. If you are looking to buy, sell or develop then give us a call first; our advice is free but a misinformed decision may cost you $$$thousands.

Have a great weekend!