"Just because it's developable, doesn't mean it's profitable". That's one of my favourite sayings. I use it a LOT!

Okay, I hear you thinking, but if I buy a site that already has Development Approval, that's a good sign, right?

Maybe, but then my saying becomes "just because it has development approval, doesn't mean it's profitable".

Reality is that there's countless reasons why someone would be selling a site that already has development approval. One of the most likely is that they've done their numbers and they don't stack up.

So in some ways it's even more likely that it's not profitable if it already has development approval!

But given there are other reasons for selling an approved site, there's always a chance you've found one of those.

Due diligence is always important, but with a DA in place, it's even more vital to make sure your research is thorough. The last thing you want is to discover there was a "gotcha" with the site that you missed.

Read It!

Reading all the terms and conditions contained in a development approval or planning permit can be very, very boring. Often they're couched in terms that don't make a lot of sense unless you're in the know.

Too bad! Read it anyway. In detail. Multiple times. Then make sure your team of consultants has also read it in detail and explained it to you.

Have I made my point yet? You still need to do all your regular site checks and due diligence, sure, but there are plenty of gotchas lurking in the fine print that you won't find through your normal checks.

Gotchas

Look for the word "remediation", in particular in relation to kerbs and channels, roads and footpaths.

Some of these conditions are fairly standard - of course you're expected to return the footpaths and so on back to at least what they were before you started the development.

But there's often little extras lurking in there. Maybe you need to replace all the footpath because it's a bit old. Or even install a footpath where there isn't one.

Doing these things costs money, so you need to be aware of those requirements and add them to your feasibility.

Easements are another important gotcha to look for. Sometimes the approval will have created an easement on your land that you can't remove. While it might help with the development, be aware that it can lessen the value of your land for future purchasers, given they can't use that land for anything, such as a shed, in the future.

Road reclamation also falls into this same bucket. Sometimes part of your property will be required to widen the road or provide a turning area in a court.

You might also have a requirement for underground power or other constraints regarding utilities. These can definitely add up, so make sure you're aware of them.

Can I Build It?

Okay, so you probably think I'm joking, but can you actually build the development based on the plans?

Seriously, you'd be surprised how often plans have errors or inconsistencies that make them impossible to build without correction.

Definitely get a copy of the working drawings during your due diligence phase, and if they exist, engineering drawings as well. Share them with your team for review.

Just because it's been given development approval, doesn't mean it's buildable. Hmmm that phrase sounds a bit familiar...

Some More Gotchas

Just when you thought I'd finished with potential gotchas - here's some more!

Check the plans and approval for earthworks and retaining wall requirements. They can look quite insignificant on a plan, but can add up rapidly.

Contaminated soil is another thing to look out for. This one should be checked under your normal due diligence anyway, but can also turn up in the requirements of the development approval.

Remediation works can be extremely expensive, so make sure you're aware if work is required and get some indicative quotes for your feasibility.

Bushfire mitigation is another requirement that can get expensive very quickly. You might also find mention of a rating on the BAL scale, which could impact design requirements for the development.

Look to see if there are any acoustic fences on the plans or in the conditions. As well as allowing for the cost of construction, this can also impact the materials used in dwellings. For example, more expensive windows to achieve noise reduction levels.

Bottom line - read and understand everything you need to do to fulfil the requirements of the development approval. Discuss it with your consultants, cost it and add it to your feasibility.

At this point I've probably scared you so much that the idea of buying a site with development approval has been crossed off your list.

And it's true - approval doesn't guarantee a development is feasible, profitable or maybe even buildable. So it's very much a "buyer beware" scenario - do your due diligence.

Having said that, though, there's no doubt that buying the right site with development approval can be a great shortcut. After all, the planning stage can be slow, expensive and potentially not lead to the outcome you want.

At least with a DA you have a fixed point to start from. Your risk is reduced, because the list of potential unknowns is reduced. With careful planning, due diligence, and professional support you can navigate potential challenges.

The important thing is to go in with your eyes wide open to make sure you take advantage of the time savings and have clarity about what's required without ending up in a financial black hole of gotchas.