3 Reasons Why Buying Land with Plans and Permits is a Bad Idea

land with plans and permits

One of the questions we get asked regularly is if buying land with plans and permits is a good idea?

Here at Little Fish, we live and breathe residential property development.

With our combined years of experience, knowledge and observation in this game, we can safely say that it is a bad idea.

The reason this question comes up is that if you browse through the real estate sales pages.

Often you’ll see large lots advertised as “ready to develop” with plans and permits included in the sale.

plans and permits tips

This should be a significant red flag – don’t be a bull, instead run away from it, as fast as you can.

In this useful article, we’re going to explain why purchasing land with plans and permits is a terrible idea.

1. You’re in This for Your Profit – Not Someone Else’s

The reason why people undertake residential property development projects is to generate wealth.

You want to walk away with a net profit. Why else would you go through the vast process that is a successful development?

When a developer sells a block of land with plans and permits, it’s because they are aiming to add value for themselves – they want a profit.

your profit

Focus on your profit instead, and avoid the purchase.

2. Don’t Buy Someone Else’s Problems and Become Locked In

A crucial part of successful property development is checking, double-checking, and triple-checking everything before you pull the trigger.

You need to be cool, calm and collected in every single decision.

When you do your own plans and permits, you know everything and can be prepared for any contingencies.

You’ve considered encumbrances, zoning, essential services, site orientation and everything else you need to.

If you buy land with plans and permits attached, you could be purchasing someone else’s problems.

In this game, you do need trust in your networks, but a random developer selling a piece of land isn’t part of your network.

They’re a random developer selling a piece of land. Don’t buy someone else’s problems, it is literally like rolling a dice.

land with plans problems

Remember that every day has a dollar value attached and delays to a project can cause costs to balloon out to staggering amounts.

This can stall or even kill a project in the water.

Getting Locked In

When a permit is issued for a build, it means that the project has to be built a certain way according to the approved plans.

There is no room for variation or flexibility. The local authority (the council) has given it the big rubber stamp.

This means you have no control over how the properties look, the features, or anything. The approved plans lock you in completely.

There’s no creative input or room to alter or change anything. You are truly locked in.

land with plans and permits locked in

And you can’t be sure that the developer has done an excellent job with the plans. They could be rubbish for all you know.

And to go back and change the plans and permits is a significant headache, and a high cost as well.

This is yet another reason to avoid buying land with plans and permits already approved.

3. It’s Better to Do it Yourself

If you are a first-time property developer, the way to get ahead is by learning. Knowledge is power, but it’s also money.

If you waltz in and buy land with plans and permits, you are missing a valuable learning experience.

Even if you avoid the pitfalls mentioned in this article, you’re still missing out because you didn’t learn the planning and permit process.

It’s a super important process, notably the plan of subdivision aspect so by skipping these vital steps in the project, you’re selling yourself short.

Those we’ve seen get ahead in this game (and by ahead we mean to make some decent bank) are those people who pay attention.

Ask questions, have a learning and growth mindset and who take the time to understand the processes.

So, for your own good and future profit, you should learn the planning and permit process yourself. It will be invaluable knowledge for your future projects.

Wrapping Up

little fish property developments

Here at Little Fish, we recommend avoiding buying land with plans and permits.

To start with, you’re paying to generate profit for another developer. Whereas in this game you want to develop your own wealth.

You may also be buying someone else’s problems. Especially if the plans and permits are not well-considered and have glaring issues.

Then you will need to fork out to fix the problems. Costing you valuable time and money but also giving you a severe headache.

With existing plans and permits, you are locked into what the local authority has approved, with no room for your own ideas.

Going back and making changes is again a costly and annoying exercise.

And finally, it is a much better idea to go through the process yourself, so you can learn and grow from the experience.

If you’re not up for the fight we recommend professional help, whether that be engaging consultants or a project management company to do the heavy lifting so you don’t have to.

If you’d like to know more about how to purchase the right land for property development, give the team at Little Fish a call on 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.