Buying With Building Plans and Permits Vs Starting from Scratch – Which is Better and Why

What is better, buying a development site with building plans and permits or starting from scratch?

If this is something that you would like to know then stick around because in this article that’s exactly what I’m going to unpack. 

Purchasing a development site that comes with pre-approved building plans and permits I believe can be extremely risky. Unless you are super experienced.

There are positives for sure, but ultimately, it’s risky if you aren’t experienced.

This isn’t the case for everyone and under all circumstances. But generally speaking it’s very risky for the reasons I am about to share.

Later in the article, I’ll share the benefits and also some tips on how to minimise that risk if you do decide to go down the plans and permit road.

residential development sites

The Risks

1. You Don’t Know Why the Site is being Sold

One of the biggest risks in my opinion is that you have no way to find out the reasons the site is being sold with plans and permits in the first place.

Something that is very important to know.

It’s not uncommon for sales agents to sell a story. The stakes are too high to trust someone that has an invested interest in you purchasing the site.

The reason could be simple and above board but ultimately you have no way of knowing for sure which means you will be flying blind hoping it’s nothing to do with the development itself.

2. You Make Less Profit

When developers sell a site with plans and permits, they almost always want to make a profit because they believe that they have added value to the site, and they want you to pay for it.

That premium you pay for the site is the profit that you want to be making.

3. The Key Decisions Already Made

And thirdly, which is more of a reason that a risk is that most of the key decisions have already been made. If they haven’t been made correctly it can cost you a lot of both time and money.

And you have no choice, you are bound to follow them because the permit has already been issued.

Now there are other risks, but for me, these are the big ones.

These are the risks or reasons that I don’t pursue sites with approved plans and permits.

Let’s now look at the positives, or I should say positive because in my opinion there is really only one main positive and that’s time.

By securing a site with plans and permits you cut a significant amount of time off the total length of a project.

Essentially meaning that you will see your profit soon, albeit potentially significantly less profit.

Who this does and doesn’t make sense for is going to come down to individual motivations.

I guess you could also make an argument knowing exactly what you can build is a positive.

But for the reasons stated earlier, I think this can also be a negative because there is a high risk of poor decision making. 

plans and permits tips

5 Tips to Minimise the Risk of Buying With Building Plans and Permits

Now I want to share some tips to minimise the risks if you decide that the plans and permits path is right for you.

Tip 1 – You Need to Check if the Plans Have Been Endorsed by Council

If they haven’t then you need to firstly make sure you are looking at the plans that council has made its decision on.  Y

ou then need to request a copy of the planning permit conditions so that you can review them.

This step alone will help you avoid any costly surprises because these conditions will need to be met for you to receive your endorsed plans from council

Tip 2 – You Need to Make Sure That You Get the Original Architects Contact Details

Whatever changes or updates that need to be made to the plans as part of the planning permit conditions will need to be completed by the same architect.

At least that’s the path of least resistance.  The alternative will be costly. You’ll need to engage someone to replicate the approved plans so they can then make the required changes or updates.

Tip 3 – You Need to Check When the Permit Expires

Although it is possible to extend a permit it’s not possible to revive one once it expires.

If the permit lapses, you’ll be required to start the entire planning application again. So it will be critical you don’t assume it has plenty of time left.

It is important to note that the expiry date is taken from the original date the permit was issued. And not from when you have made any amendments to the permit if that is the case.

Tip 4 – Look at the Buildability and Design of the Project

Amendments cost both time and money. The last thing you want is to be going back into council if you can help it.

So look at the design and make sure you are happy and then finally look at the buildability and constructability of the project.

Don’t assume you can make changes to reduce the construction cost. Because you can’t unless you are prepared to hold the project up to get the required amendment approvals from council.

Tip 5 – Crunch Your Numbers and Make Sure They Stack Up

You don’t want to be operating too close to the line so if you find yourself massaging the numbers then the one you are looking at may not be the one.

Remember, the name of the game is patience and discipline. There will always be another site with approved building plans and permit.

Are you thinking about undertaking your own residential development project?

Why not reach out to our expert development project management team, we’d love to hear from you 1300 799 277.

peter kelly

To put it mildly, Peter Kelly is enthusiastic about real estate. When he’s not looking at properties, or visiting potential sites, Peter can be found online at realestate. com. For him, it’s more than a job – it’s an obsession. Peter is a co-founder here at Little Fish Property developments.