In today’s show Bryce Yardney, project manager at Metropole, shares his experience on how to choose a location for property development. After you have done your initial investigation, what you should be looking for in an area. He also tells us where he sees many aspiring developers go wrong.
Kevin: My special guest this time is Bryce Yardney. We’re talking to Bryce about development, and in this chat, I’m going to be talking to him about the suburb due diligence that you need to do.
By way of introduction, Bryce is a property development specialist, having successfully completed many development projects. Initially working as a project manager at Metropole since completing his Bachelor of Project Management in 2011, he now also acts as a buyer’s agent for clients, sourcing and evaluating properties with development potential.
Bryce, thank you and welcome to the show.
Bryce: Thanks, Kevin.
Kevin: We’ll look firstly at suburb due diligence, and I think we’ll follow that up in a later chat when we look at property due diligence. What do you look for when you’re assessing locations in where you’re going to undertake a development?
Bryce: Let’s assume that people have done their homework on where they want to invest, and I’ll start talking a bit about development. What we look for in areas we do our development in are areas that are gentrifying, where older houses are past their use-by date, ready to be knocked down and be developed into new homes and new developments. You always want a mix of both in there. You don’t want too much development and you don’t want too many single homes, either.
Areas that are gentrifying – wealthier younger families are moving in, older people are starting to move out. It’s the younger wealthier families who are going to underpin the market there, as well. That’s one of the key things we look for, as well.
We look for councils that are constantly putting back into their infrastructure, their schools, their railways – the things that are going to add value to the area. On councils, you have to make sure that the council you’re dealing with is a development-friendly council, and there are many out there that just aren’t development friendly at the moment.
Kevin: How can you tell that they are development-friendly? Apart from asking, of course.
Bryce: There are really two things. One is you can do your homework and have a look on their website, have a chat to them over their phone, and find out their policies. And it’s not just the policies that you can find out on the Web; unfortunately, you also have to know their under-the-counter policies, as well.
Kevin: What are under-the-counter policies?
Bryce: They’re the ones that they’re not going to tell you over the phone, they’re not going to tell you on the Internet. They’re the ones that you’re only going to unfortunately know by having gone through the process three, four, or five times – been there, done that. They’re the ones that they enforce with general terms that aren’t really objective; they’re more subjective things.
Kevin: Can you give me an example?
Bryce: I’ll give you a good example of one that we’re dealing with a lot at the moment. They’re using the term “visual bulk.” What does visual bulk mean? There’s no measurement of a side boundary that you have to be set back from to make your development not visually bulky. All they’re saying is perhaps you’re standing in your neighbor’s private open space, your neighbor’s backyard, and you look up and see this visually bulky development.
What does that mean? Who knows? It’s really a case-by-case thing, and councils are using this term “visual bulk” to cut back on developments and say, “No, the development is too visually bulky.” If you ask them to quantify that and say, “Okay, so what do we have to be set back on our rear boundary, on our side boundaries?” there’s no answer to it. It’s one of those under the counter things that they use to get what they want.
Kevin: It’s a bit case-by-case, is it? Does it help if they know the architect you’re using?
Bryce: Absolutely. Having gone through it a couple of times and having the experience with them, knowing the consultants and team behind the development helps. Absolutely. Unfortunately, sometimes it is still a case-by-case thing, but you can increase your odds, I guess.
Kevin: Just to round this chat out, Bryce, what are some of the biggest mistakes you see budding developers make when they’re looking for a suburb with development potential?
Bryce: Two things. The first one is that people always look for that hot spot, they look for the next big thing, rather than areas that have always done well and probably will always do well. They make that mistake of jumping onto the hot spot.
The second one comes back to what we were talking about earlier, about having the wrong team behind you. Consultants in terms of development costs are a relatively small percentage. People try to save money on these things instead of looking for value. So having that right team around you and maybe spending a few extra dollars on that will really make a difference in your returns at the end of the development.
Kevin: A really good summation there on how to find a suburb to do a development in. Next time you come back, we’ll have a look at the property due diligence you need to do once you’ve decided on the suburb.
Bryce Yardney has been my guest. Bryce, thanks for your time.
Bryce: Thanks, Kevin.