Choosing the right block of land is just as important as selecting the right home design for your investment property and choosing your land wisely can potentially save you tens of thousands of dollars and provide plenty of other benefits you may not have considered.
Author: Peter Gianoli, General Manager, Investor Assist.
If you already have a home in mind and are looking for a perfect piece of land, or if you are just starting to explore a few new land estates to see what is on offer, here are a few things to keep in mind to minimise costs and avoid expensive and unwanted surprises:
Is the size of the lot appropriate for the house design? Some developers create estates with smaller lots to encourage two or three storey homes but this will substantially increase building costs requiring a higher rental return. You also don’t want a block that is too big for the home design creating a large backyard which is costly to landscape and hard for tenants to maintain.
Lot frontage, shape and slope
Before you start looking, get an indication of the average frontage of popular investment property house designs to ensure your selected lot can easily accommodate your preferred design/s. Odd shaped lots are hard to accommodate and may require a custom designed home which will significantly blow your budget. Sloped lots can also impact costs as they may require retaining walls or a split level design.
Check out the soil classification and ask the developer for a copy of the report. You need to know if the land is remediated or if the soil contains rock, deep fill, reactive soil, trees or a higher water table. It is important to know the soil quality as it can have varying compaction qualities, drainage and soil movement potential. Identify if there are any covenants or issues affecting the quality or condition of the soil or engage the services of a qualified Structural Engineer to provide an independent assessment.
Planning controls, overlays and covenants
Overly onerous controls or covenants may restrict your preferred design and the building materials you want to use plus add additional building costs. Covenants are generally shown on the Title so thoroughly check your documents and have your agent and/or conveyancer provide you with further details if applicable.
Easements & utilities
An easement is a section of your property that has an underground service installed which services the surrounding neighbourhood and you can’t build over it, effectively reducing the ‘useable’ area of your lot. Establish if any exist for your lot and what impact they will have.
Site works are the preparatory works that must take place on a lot before the house is built and are generally additional costs. They can vary greatly from site to site and can be minimised with the selection of the right lot so do your homework. They may include works such as earthmoving, storm water disposal, connections , retaining plus more.
Check the following to make sure they don’t impact on your lot or the preferred position of the house – verge trees, side entry gullies, power poles, light poles, connections, sewers, hydrants, footpaths and access ramps.
Parks & Roads
If your preferred lot is in a new estate check the approved/proposed master plan for the estate to confirm proximity of your lot to parks, main roads and community facilities as this may impact the perceived future value of the block.
Establish what fibre optics and utilities are available for you to connect to such as gas, telephone, water, electricity, sewer and stormwater. These utilities are usually provided in surburban estates but it always pays to check.
Landscaping and fencing rebates plus incentives
Many land developers offer a landscaping and fencing rebate as it helps maintain some uniformity throughout the estate. Many additional incentives are also on offer (such as cash bonuses or vouchers) to attract buyers to their estate and when combined with the landscaping and fencing rebates it has the potential to save thousands of dollars so shop around!
Investor Assist works with the majority of land developers in Western Australia and Victoria and an Investment Specialist is on hand to assist you with the process, identify what to look out for or can negotiate the land purchase on your behalf if required. For more detailed information regarding what to look out for when choosing a new block of land for your investment property, download a copy of the free Investor Assist eBook, ‘Financial Security Through Property’ available from the Investor Assist website.
DISCLAIMER:This information is of a general nature only and does not constitute professional advice. We strongly recommend that you seek your own professional advice in relation to your particular circumstances.