International Money Transfer
Council Approval Deals
Investing Strategy
The Development Approval (DA) and Building Approval (BA) are the most popular type of council approval deals for property investors. DA is the authority granted by the local council to the development of a parcel of land. BA is the authority granted by local council to the building of a particular structure on a parcel of land.
Due to the fact that post DA/BA blocks of land are worth more than pre-approved ones, investors are able to make profits via purchasing a particular parcel of land and having it approved for a Development and/or Building by local council and then selling to serious land developers.
Keys to make it work:
- A negotiated Option Contract with the vendorl
- Control versus ownershipl
- Pre lodgement meetingsl
- Understanding of council initiativesl
- Experienced in lodging proposal
Financial Requirements:
The financing of these types of projects often are at 60-70% LVR. However, the bankers are generally willing to lend more once the council has granted the approval.
The costs to gain development and building approval for a block of land usually involve an option fee, cost of plan, professional consultant fees, council application fees and other legal advice fees. Extensive tests may need to be done to obtain council approval. This money is at risk if the council declines the application.
Time frame and exit strategies:
The time frame for gaining development and building approval vary depending on the council and project complexity. Often, the investors can either sell the approved land to the developers, or add on a plan then sell to the end customers.The Return Perspective:
The large-scale project could make very good profits. Smaller scale projects are also quite profitable with ROI as high as 1000% within months.
The Advantages:
Using this strategy is a good way to create sizable wealth. The investors often only pay for the option fees and application stage costs. Many land developers are willing to let another source to finance the approval stage to avoid waiting period.
Investing in the development approval stage generates great return with low cost to entry.
The Potential Risks/Difficulties:
The council might decide not to grant the approval for the proposed development or building if they find the proposal doesn't fit their town plan. The investors would need to carry the financial loss of proposal preparation up to that point.
In some cases, the waiting period for council approval could be a lot longer than expected. Without strong financing, investors might not able to withstand the holding costs of the project.
It's hard to predict the length of the waiting period for gaining development and building approval and the possibility of an application approval being granted.
It is not easy for Doing It Yourself (DIY) investors to find good investment opportunities on their own without necessary knowledge, tools, experience and connections.
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