Have you ever wanted to know exactly what you need to consider when identifying a residential development site to avoid negatively impacting the outcome of your project?

Awesome, because in this article I’m going to share four of the most common mistakes beginner property developers (and even experienced property developers if they aren’t on their game) make that have the potential to derail your entire project.

When undertaking a residential development project whether it’s your first one or you’re an experienced developer there are countless environmental factors you need to consider. These development site considerations will go a long way to ensure a successful project outcome.

Before we sink our teeth too far into the article you may want to learn about risk management in property development.

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1. Trees

Trees on development sites might seem obvious but there are numerous factors you need to consider when evaluating the trees on a potential residential development site.

To the untrained eye, a site could have what might seem like small insignificant trees. But I’m here to tell you it’s not all about size and height. There is more to it than the obvious. You need to consider the species and understand your local areas vegetation overlays, regulations and requirements.

Understanding trees better than your competition can give you a competitive advantage. Your competition might discard a site that has a large tree in an unfavourable location. Where if it can’t be removed would significantly impact what they could achieve on the site. Which is fair enough.

residential development site

For example, you have a site that is has a massive tree on it. You know if it can’t be removed it will be guaranteed to affect what you can achieve so it puts you off moving forward with it. This could be an opportunity lost.

BUT if you understand that there is more to it than the size you could uncover a diamond in the rough.

You need to look at the immediate area. Is it an outlier to the immediate surroundings. What species is it, is it native to the area, the sheer size could mean it’s unsafe,  what does the health of the tree look like. These are just a few of the things you need to look at.

Finally, on trees, if you don’t have the understanding and knowledge then get an arborist to check it out for you. For the sake of a few hundred dollars, you could unlock a site that all other developers have discarded.

Not to mention you’ll most likely learn something through the process.

On the subject of learning. Check out this trusty article where we detail the specific skills needed for property development success.

2. Unfavourable Setbacks

residential development site setbacks

It’s important you understand how setbacks are assessed. It’s simple once you know it. If you think you know but you don’t it can and will negatively impact the outcome of your project.

It’s important to know that your sites likely setback requirements are going to be the average of your immediate neighbours to the left and right of your potential site. So, measure both neighbours’ setbacks, add them together and divide them by two (see image above).

This is a great place to start. Although if there is a precedence of more favourable setbacks in the immediate surrounding area. It is possible to sneak an extra meter and sometimes even two in your application. But as they say, if you play with fire you can get burnt.

So as long as you’re making educated decisions to avoid surprises you should be fine.

Before we hook into number three if you are about to kick off your first project make sure you check out these common property developer pitfalls. You need to start thinking critically about your project before it’s too late.

3. Overlays

residential development overlays

There are many overlays that you need to consider when looking at a residential development site.

Some are specific to individual areas so the key with overlays is understanding the types of overlays in your area. All the information you need can be found online for free.

For us here at Little Fish we use an awesome site called Land Checker, it’s a subscription-based site so you’ll need to shell out a few dollars.

But if you are serious about becoming a successful real estate developer then it’s the cost of doing business.

4. Covenants

It would be fair to say that this one has caught many developers out. Don’t become a statistic. Make sure you tick this box every time you are doing your due diligence on a development site.

Covenants could be anything and could date back any number of years. In a lot of cases, they may not even make sense but that doesn’t matter.

If a site has a covenant, no matter how obscure and strange that it maybe there is still a significant process you will need to follow to get it removed or to get an exemption.

Which as always comes with a level of uncertainty and is guaranteed to cost your project both time and money.

Make sure you go through the section 32 of the property you are looking at with a fine-tooth comb.

It’s OK to move forward with a site that has a covenant if you understand what the covenant requirements are and if you clearly understand the impact it can have on your project.

And of course, you have factored it into your feasibility.

The risk you are prepared to take is completely up to you. It’s the not knowing and surprise if you aren’t aware that can become a big issue very quickly.

That’s four critically important factors that you need to consider every time you are running due diligence on real estate development sites.

When running your due diligence, it’s important that you are methodical and consistent.

One thing you can be certain of is the first time you don’t consider one of these factors is the exact time it will bite you in the arse.

If there was only one takeaway from this article it would be to never assume. Assumptions are a developer’s enemy.

Remember, as a developer knowledge is not only power, it’s also profits. If you get it right, we are talking about life-changing profits.

One last point you might want to consider if you are looking to purchase a site to develop are the risks around purchasing a site with plans and permits, it can be a risky business which I explain here. And of course, you need to be thinking about the overshadowing regulations.

You also want o understand how to calculate the future value of your proposed townhouses.

To learn more about cost and time check out this real estate development case study we’ve done on a three-townhouse corner development site.

If going it alone isn’t your thing. Check out our property development consultant service we offer. We would love to help with your project if there was an opportunity to.