This one definitely lands in my list of the top 10 questions I get asked. It's a good one! Buying a site, getting a DA and then flipping it on to someone who wants to take it through to completion is a great way to earn some cash with minimal risk and shorter timeframes. I mention it as one of my Low and No Money Down strategies.
But...
It's not quite as simple as that! One of my favourite sayings "just because it's developable doesn't mean it's profitable" holds true here too. Just because it has a DA, doesn't mean it's worth more.
So how do you work out if getting a DA is worth it?
Let's get real here. The value of a development application isn’t based on what you hope it’s worth, what it cost you to obtain, or how much effort has gone into getting it approved. A DA is only worth what the next developer can afford to pay while still making a profit.
If the buyer can’t make money, they won’t buy it. It really is that simple. And no amount of optimism, effort, or sunk cost changes that reality.
To understand the true value of a DA, you have to stop thinking like a seller and start thinking like the buyer.
Think Like The Buyer
For a DA flip to work, someone else needs to be able to step in and develop the project profitably. That means you need to stop thinking like a seller and start thinking like a developer who is about to take on all the risk.
The means the right question isn't "what do I want to sell this for?"
It’s “If I were developing this myself, what’s the maximum I could pay for the site and still be happy with the profit?”
That mindset leads directly to a top-down feasibility, which is the foundation of understanding DA value.
To put it another way, instead of starting with what you’ve paid (or want to pay) for a site, you start with the finished product and work backwards, subtracting every cost along the way until you reach a maximum purchase price.
Top-Down Feasibility: Working Backwards From Reality
The starting point for a top-down feasibility is the Gross Realised Value (GRV):
Multiply the two and you have your total end value.
This number must be conservative and evidence-based. Overestimating sale prices is one of the most common reasons feasibilities fail.
Once you have the GRV, the next step is where many developers go wrong.
Profit must come first.
Profit is not what’s left over if everything goes well. It’s not a reward for effort. It’s a line item that needs to be locked in at the start of the process.
If a deal can’t support the level of profit you need to make it worthwhile, it isn’t the right deal, no matter how attractive it looks.
So the first thing you subtract from the GRV is your required developer profit.
After profit, you begin subtracting the unavoidable costs of delivering and selling the project. This includes things like:
These figures don’t need to be perfect at an early stage, but they must be realistic. Guessing low doesn’t make a project more profitable, it just delays the pain.
Next come the costs that quietly destroy a feasibility when they’re missed or underestimated:
Every one of these costs reduces what a developer can afford to pay for the site.
When all of these costs are deducted, the figure you’re left with is the maximum price a developer can pay for the site and still achieve their required profit.
That number is what the development application is actually worth for that site.
Now you know that maximum price, you need to treat it as a hard limit.
This isn’t a flexible number. It’s not a “maybe if everything goes perfectly” figure. It’s the line that protects your profit.
If the deal requires paying more than this amount, the numbers simply don’t work. At that point, the DA might still be interesting, but it’s no longer viable for the buyer.
Bottom-Up Feasibility: Reality Check
This starts with today’s reality rather than the finished product. You look at the actual asking price for the site, the stamp duty payable, the holding costs during the DA and pre-construction phase, and the real cost of getting the project to a point where it can be sold or built.
When you compare the bottom-up feasibility with the top-down result, one of two things will happen. Either the numbers align and the deal works, or there is a gap.
That gap is incredibly valuable, because it tells you exactly what needs to change. It might mean the site price needs to come down. It might mean the end values are too optimistic. It could mean the yield needs to improve, or it may simply mean the deal isn’t viable at all.
Understanding the Gap
This is where many people get stuck because they don’t know what they don’t know.
This is where developers learn when to negotiate harder, when to walk away, and when spending more money upfront can actually reduce risk later on. It’s also where you learn which DA flips are worth pursuing, and which ones should be avoided.
Most development mistakes don’t come from recklessness. They come from not knowing what you don’t know.
Education, experience, and disciplined feasibility work are what turn development from speculation into a repeatable business. That's what we teach in our Property Development Formula course.
So, What Is a DA Really Worth?
A development application isn’t worth what it cost you to obtain. It isn’t worth what you hope it’s worth, and it isn’t worth what someone casually suggested it might sell for.
It is worth what another developer can pay while still making an acceptable profit.
Once you understand that, and apply disciplined top-down and bottom-up feasibilities, development stops feeling like guesswork and start making decisions with clarity and confidence.
And that’s when development stops feeling like gambling and starts feeling like a business.
But...
It's not quite as simple as that! One of my favourite sayings "just because it's developable doesn't mean it's profitable" holds true here too. Just because it has a DA, doesn't mean it's worth more.
So how do you work out if getting a DA is worth it?
Let's get real here. The value of a development application isn’t based on what you hope it’s worth, what it cost you to obtain, or how much effort has gone into getting it approved. A DA is only worth what the next developer can afford to pay while still making a profit.
If the buyer can’t make money, they won’t buy it. It really is that simple. And no amount of optimism, effort, or sunk cost changes that reality.
To understand the true value of a DA, you have to stop thinking like a seller and start thinking like the buyer.
Think Like The BuyerFor a DA flip to work, someone else needs to be able to step in and develop the project profitably. That means you need to stop thinking like a seller and start thinking like a developer who is about to take on all the risk.
The means the right question isn't "what do I want to sell this for?"
It’s “If I were developing this myself, what’s the maximum I could pay for the site and still be happy with the profit?”
That mindset leads directly to a top-down feasibility, which is the foundation of understanding DA value.
To put it another way, instead of starting with what you’ve paid (or want to pay) for a site, you start with the finished product and work backwards, subtracting every cost along the way until you reach a maximum purchase price.
Top-Down Feasibility: Working Backwards From Reality
The starting point for a top-down feasibility is the Gross Realised Value (GRV):
- What will the finished dwellings realistically sell for?
- How many dwellings are being delivered?
Multiply the two and you have your total end value.
This number must be conservative and evidence-based. Overestimating sale prices is one of the most common reasons feasibilities fail.
Once you have the GRV, the next step is where many developers go wrong.
Profit must come first.
Profit is not what’s left over if everything goes well. It’s not a reward for effort. It’s a line item that needs to be locked in at the start of the process.
If a deal can’t support the level of profit you need to make it worthwhile, it isn’t the right deal, no matter how attractive it looks.
So the first thing you subtract from the GRV is your required developer profit.
After profit, you begin subtracting the unavoidable costs of delivering and selling the project. This includes things like:
- GST payable on sales
- Selling and marketing costs
- Construction costs
- Consultant fees
These figures don’t need to be perfect at an early stage, but they must be realistic. Guessing low doesn’t make a project more profitable, it just delays the pain.
Next come the costs that quietly destroy a feasibility when they’re missed or underestimated:
- Holding costs and interest
- Finance and line fees
- Land tax
- Council rates
- Stamp duty on acquisition
- Miscellaneous project costs that inevitably arise
Every one of these costs reduces what a developer can afford to pay for the site.
When all of these costs are deducted, the figure you’re left with is the maximum price a developer can pay for the site and still achieve their required profit.
That number is what the development application is actually worth for that site.
Now you know that maximum price, you need to treat it as a hard limit.
This isn’t a flexible number. It’s not a “maybe if everything goes perfectly” figure. It’s the line that protects your profit.
If the deal requires paying more than this amount, the numbers simply don’t work. At that point, the DA might still be interesting, but it’s no longer viable for the buyer.
Bottom-Up Feasibility: Reality Check
This starts with today’s reality rather than the finished product. You look at the actual asking price for the site, the stamp duty payable, the holding costs during the DA and pre-construction phase, and the real cost of getting the project to a point where it can be sold or built.When you compare the bottom-up feasibility with the top-down result, one of two things will happen. Either the numbers align and the deal works, or there is a gap.
That gap is incredibly valuable, because it tells you exactly what needs to change. It might mean the site price needs to come down. It might mean the end values are too optimistic. It could mean the yield needs to improve, or it may simply mean the deal isn’t viable at all.
Understanding the Gap
This is where many people get stuck because they don’t know what they don’t know.
This is where developers learn when to negotiate harder, when to walk away, and when spending more money upfront can actually reduce risk later on. It’s also where you learn which DA flips are worth pursuing, and which ones should be avoided.
Most development mistakes don’t come from recklessness. They come from not knowing what you don’t know.
Education, experience, and disciplined feasibility work are what turn development from speculation into a repeatable business. That's what we teach in our Property Development Formula course.
So, What Is a DA Really Worth?
A development application isn’t worth what it cost you to obtain. It isn’t worth what you hope it’s worth, and it isn’t worth what someone casually suggested it might sell for.
It is worth what another developer can pay while still making an acceptable profit.
Once you understand that, and apply disciplined top-down and bottom-up feasibilities, development stops feeling like guesswork and start making decisions with clarity and confidence.
And that’s when development stops feeling like gambling and starts feeling like a business.
