How to Find Profitable Development Sites Before They Hit the Market

https://www.youtube.com/watch?v=Qd1uc0aqCWg

Knowing how to find profitable development sites is what separates active developers from everyone else still refreshing realestate.com. Here are four strategies that actually work, from agent relationships to off-market deals and direct landowner approaches.

Most people think property developers find profitable residential development sites by scrolling realestate.com.au or waiting for something good to pop up. That’s not how it actually works. The best development deals almost never show up online. They’re found through relationships, off-market opportunities, direct conversations with landowners, and by spotting development potential that most buyers completely miss.

And once you understand how this actually works, you start seeing opportunities everywhere. Because sourcing property development sites isn’t luck. It’s one of the most valuable skills a property developer can have.

This is what smart development site acquisition really comes down to: building relationships, spotting value early, moving quickly, and knowing which opportunities are worth chasing before the rest of the market catches on.

In this article, I’ll show you how to find development sites, how agents bring deals to developers, how off-market opportunities happen, how to approach landowners directly, and how negotiation around development can potentially completely change the value of a property.

Guys, let’s get into it.

Building Rapport With Agents

Talking to real estate agents is going to be the first one. Agents are your friend. So putting in the work, going to open homes, going out on a Saturday, finding those sites, speaking to the agents who are listing those sites in your area, building rapport with them and telling them what you want to do.

Sharing, being vulnerable, saying, hey, this is what I’m looking for. This is the price point. And obviously the areas you’re looking in where you’re going to these open homes and you are talking to agents, those agents are dominant in this area. So they’re the ones you want to be talking to.

And you’ll definitely find there’ll be a theme of what type of agent or which agents are dealing with the potential development sites. There’s usually a theme. Once an agent has success in a certain lane, they often get found as… successful agent for that type of product. So you’ll find if you find the top five agents in your area that are selling what you are chasing, they’re the ones that you want to frequent.

Make sure you build up the rapport, do your homework, make sure you know your numbers. So when you’re talking to the agent, the agent knows that this isn’t just a flash in the pan for you. You’re not just rocking up. sort of wasting his time, his or her time. You are rocking up with your information. You’re putting in the work in front of the computer, collating the data and then getting out there on a Saturday or midweek during these opens to share stories with the agent and have them understand and believe the mission you’re on.

You are actually a buyer and you are actually going to buy a development site because that’s what an agent wants. An agent wants to deal with someone who’s a buyer or a seller. That’s how they pull deals together. That’s how they do transactions and that’s how they make money. Buyer, seller.

Closing up on that one, relationships with the agents, put the work in, do the reps, get on the phone call. know your stuff and build that rapport. So when a site comes up, they think of you.

Winning Off-Market Deals

So how do off-market deals happen? They happen through building rapport with the agent and keeping that touch and feel. A text message here and there. If you’ve built a relationship with an agent, you haven’t spoken to them for a couple of weeks, send them a text. Say, hey, I’m still here, still looking. I’ve seen this house sell, that site sell, still looking, really keen to buy.

Doing that and those touch points are super important because agents are busy people and they’re busy trying to list property, sell property. They’re trying to make their next dollar like you’re trying to make your next dollar. So it’s super important that you keep front of mind with them and an off-market deal comes your way.

Super important that you act quickly, but only after you’ve done a proper property development site analysis. So now we’re talking about due diligence, your property development feasibility study, and knowing the development site red flags that can turn what looks like a good opportunity into a bad deal. You need to make sure you know your stuff and you have your property development consultants in place.

So you can act quickly, figure out what’s going on with it, and you can talk to the agent, figure out where you sit, maybe where you see value, and move quickly with them.

Don’t be coy. Don’t play hard to get. This is an agent with an off-market opportunity. They want to do a deal. Their vendor wants to do a deal. Obviously, they want to avoid marketing costs, maybe avoid open homes. So they want to move quick.

You as a buyer, you need to move quick as well. You want to make sure the agent believes that you are going to be the buyer because the moment an agent believes that you’re potentially not the buyer and you’re just feeling your way through and maybe you’re not the guy, they are then going to send it out to that next ring of buyers off market that they think can buy it. And now suddenly… an off-market opportunity where it’s a one-on-one between an agent has gone to 10 people. Suddenly, you’re under competition. You’ve moved slowly.

Now, suddenly, you’re back to it. You’ve done your property development due diligence. You’re back to the agent to say, hey, I’m here and I want to make an offer. Now, suddenly, the agent says, well, you know what? I’ve got another two buyers that are now interested. Suddenly, you’re in an auction. You’re in a bidding war. You’re in a boardroom having an auction competing for a property that if you had have acted quickly and done your stuff quickly and move quickly, you could have secured it by yourself and potentially under no competition.

And as we know, competition drives price up. That’s not what we’re interested in. So the lesson here, guys, is… Getting the off-market deals, super important, but then knowing what to do with them when you get them and acting accordingly. So you can actually buy it off-market under no competition rather than waiting and being slow and buying it off-market, but under a handful of competitive other buyers, which means you’ve paid more for it. or you’ve missed out on it.

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Approaching Landowners Directly

All right, now let’s get into the third one that I want to talk about. Now, approaching landowners. This one’s super interesting because there’s definitely a bit of a perception, potentially a little myth, that developers just deal with landowners and they deal directly with landowners. They do letterbox drops and they just go to the sites that they want to buy and then they negotiate them and buy them.

Now, this does happen. and can happen for sure and i don’t want to tell people that it doesn’t but it is a low percentage play but if it can come off happy days.

By this point you figured out the area that you want to do the developing so you know maybe a bunch of streets you might be 10 different streets in a in a rectangle in a suburb where you know the block sizes are you know maybe it’s an aging area and you can start to do letterbox drops you can build rapport with landowners.

And all this stuff is very time consuming, but when you’re starting out in property development, you’ve probably got a bit of time on your hands and it allows you to go in and do your best in this space. Because if you can get the right block under the right terms at the right price, which suits you and the vendor. which can and does happen, you can really be off to the races and it can be a really good start or early start into your property development journey.

Not to say more experienced developers don’t do this. They definitely do do this, but they’ve probably got more of a pipeline and flow of opportunities. coming through, and they’re not that starting from scratch doing that door knocking.

Now, you can do the door knocking. You can work with an agent that you’ve built a relationship with to say, hey, Mr. or Mrs. Agent, this is the area I’m looking at. I need to buy something. The agent goes, well, I’m in the business of doing deals. I’m in the business of doing transactions. So you give them an area, and we’ve done this in the past, and you say, here you go. This is what will pay for these sites. can you door knock?

Because that’s what agents do as well. Agents prospect, they door knock, they do letterbox drops. So it’s part of their day-to-day, week-to-week activities anyway, or the good hardworking ones anyway. So if you give them the task, then they, off their bat, will be looking to… listings and build relationships. But in the back of their head, they’ve got a developer that’s ready to go and ready to buy.

So they’re two strategies. I like the agent one myself, approaching landowners as a developer. The landowners can get sheepish, can get a bit anxious. As Mr. or Mrs. Property Developer has come to buy my property and they like to buy it for cheap. When there’s an agent involved, there can be an element of trust, a middle person. to broker the deal, to give advice to the landowner, advice to the buyer, and they can bring the deal together.

Obviously, there’s an agent involved, there’s an extra set of costs, there’s a commission piece there, but sometimes that can be worthwhile. They’re the two pathways. So do one, do both. Again, this one’s peeling back to building relationships with the agent. The agent knows you’re a serious buyer and you’re going to buy the property. Well, then an agent’s going to be door knocking anyway. So for an agent to go out there with a buyer already in their pocket, ready to go, gives them a lot more ammunition when they are knocking on these doors.

But if you’re knocking on the doors and building rapport, giddy up, know your stuff, know what you’re prepared to spend. And when you’re talking to the vendor, potential vendor, figure out what they want. Figure out what it is in the deal that they want. Do they want a long settlement? Do they want to live in here for a while? And do they want a deposit or a deposit that you’ve signed a section 27 on or early release of deposit monies?

There’s all these things that drive sellers. You need to figure out what’s driving them because they’re the nerves. They’re the pressure points you want to press on. They’re the things you want to be able to negotiate hard with them and try and give them because you’re trying to negotiate potentially a longer settlement. a more modest sale price or what you think is a more modest sale price.

So in any type of deal, there’s needs and there’s wants from both parties. Figure out what the needs or wants are from the landowner, and then you’re in best position to negotiate.

Understating the Development Potential

All right. Now, last one for today, negotiating the development potential. So you might be negotiating with an agent, with a landlord. With a landowner, vendor, whoever it might be, you need to understate the development potential.

Because when you’ve got an agent, when you’ve got a landowner working on their development site and their deal. They think it’s the best site in the suburb. They think it’s the best site in Australia and they think you can do a skyscraper on there. What you need to do is be a bit understated on what can be achieved on the site. Because as you know, as a property developer, It’s all subject to council approval also.

So make sure that you’re being quite modest in your approach in what you’re looking to achieve. In your head, you might be able to achieve a three or a four townhouse site. For me, I would taper my expectations on what I can get on the site when negotiating either with an agent or with a landowner.

Because one, you don’t exactly know. As a savvy developer, you’ve got a pretty good idea, but you don’t exactly know. But the more you tell them that can be done with the site through these negotiations, they essentially are starting to think, oh, maybe it’s worth more. If you can get four on this site, I thought you could get three. If you can get four, maybe it’s worth this.

So I would be just tapering everyone’s expectations on what can be done on the townhouse development site, which is definitely a safer approach when negotiating these deals. Taper expectations down. And if you are lucky enough to secure it, then you can go as hard as you want and try and get as much as you want.

But as we know in the early stage, it’s always subject to council approval. So taper your expectations. It’ll help your negotiations and hopefully you get a fair deal. where both parties are happy.

Wrapping Up

If you’ve been wondering how to find profitable development sites without relying on what’s publicly listed, these four strategies are your starting point. Put in the reps, build the relationships, and the right sites will come to you.

If you got value from this article and you want more support, we offer a few different ways we can help. From one-on-one property development mentoring to full property development project management through to our buyer’s agents service, where we can help you secure development sites in Melbourne that work. If you wanna talk through your situation, you can book a call with me directly anytime.

Make sure you’re inside the Little Fish Network as well. It’s completely free and it’s full of experienced builders, developers, investors helping each other every day.

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