How can you tell if a deal’s a deal? Billion Dollar Property Developer Bob Andersen focuses his discussion on due diligence.
Hi everybody! Bob back again, talking property development.
Today, I’d like to talk to you about some of the tools that you can use when doing due diligence. We’re talking about checking out if a deal is a deal. In other words, if we’re looking at a potential development site, we need to scrutinise it, put some heat on it, see if it’s really a deal, and if there’s are any issues that we need to be aware of—that basically is what due diligence is about.
These days, it’s fantastic because there’s so many tools out there—most of them are free. When I started off in property development all those years ago, this just didn’t exist—way before the internet. These days, it’s fantastic. In fact, one of the best sources of information can be your local council website. I have to say, as I go around Australia, I’ve looked around different websites. Some are great, some are absolutely fantastic and full of information, some are a little bit on the skinny side. What you need to do is to look at your city council or town website. Have a look at what information they’ve got there. Where I live, it’s a fantastic one, if you look at the city website in the town planning area, I can get so much information.
Just for a start, the planning scheme. I can get a full copy of the planning scheme for that whole city in all its detail. Better than that, mapping systems, things like zonings, they’re part of the planning scheme that tells us what we can and can’t do in certain areas. In order to know that, we need a zoning map. On council websites, you’ll often find a zoning map and it’s often colour coded. Different colours mean different zonings. If you’re not sure what you can do in a particular zone, all you have to do is look at the planning scheme and it’ll tell you. Also, they’ll be copies of neighbourhood plans. In some particular areas, suburbs, or neighbourhoods, they’ll have an overriding plan that overrides the whole planning scheme itself. It’s very specific for that area, and you’ll find copies of those there as well. Things like overlays that overlay a particular area: Bushfires, koalas, environmental overlays, there’s all sorts of overlays that can be in a planning scheme, and they’ll show you those as well.
Another important thing in the mapping system on a lot of council websites is that you can get the contours. The contours will tell you how steep the land is or how level, but also which way the land slopes. That’s quite important when you’re looking at things like sewage and storm water, and you want to know which way the water will flow. Will it flow down towards the road, will it flow away from the road? Contours are very important.
Often you’ll find things like flooding maps. You put an address in it, they’ll tell you if the site floods, or even if it has overland flow in the heavy rain. If the water flows over there, it could be an issue.
There’s so many things in these council websites, not just the mapping alone. You can check and track development approvals, other people’s approvals quite often, and you can learn a lot from watching those as well. Council websites can be a great source of information.
Another one that we use a lot—a free one in fact—is what we call “Dial Before You Dig”. If you’re not sure about that, Google it up. You can sign up without costing you anything, you get logins for free. That enables you to check the services on any particular block of land. The services I’m talking about are storm water, water reticulation, sewage, Telstra, gas, those sorts of things. They’ll show you where the pipes are. It’s there so that people know where the pipes are so they don’t dig them up. It’s great information for property developers when doing our due diligence.
Two particular things that we’re interested in is the sewage and the storm water. We need to know where these pipes are, and we need to know—if we’re doing a building—which way it will flow. A combination of a contour map shows us which way the land slopes and where the pipes are. That can give us some great valuable information. Google Earth has been available for quite a while now, that’s great as well. We can have a look at the site we’re looking at. We can see its proximity to shopping centres, bus stops, bus changes, intersections, railway stations—all sorts of things we can tell from Google Earth. Google Maps are great as well, by showing us particular lots. Google Street View is great as well. We can get there, swing around, have a look at things like trees—Are there any trees on the site? We can tell from Google Earth, but also from the frontage on Google Street View. We can see if there’s any potential problems, things like a bus stop in front of the lot. Is there a traffic calming device? Are there traffic lights? Telstra pits? All those sort of things we can pick up off Google Street View. All of these things mentioned are the moment are free and available.
There are some due diligence tools that you have to pay for, and they can be very good. RP Data or Corelogic (as we now call it these days) can be a great source of information. In most states in Australia, there are a few privacy provisions—they can’t tell you everything. But generally you can tell who owns the block of land, when they bought it, what did they pay for it, what services are connected there, we can also look at the registered plan. We can pick that up—and lots more information than that—on RP data. Things like title searches, contaminated land, all those sort of things. There’s so many searches now that we can do on the internet. CITEC Confirm is one particular place. Each state have some organisations that gather a lot of these data from the state government. Some are free, some are paid for–title deeds might be around $20—they can tell you a lot as well, like if there’s any easements on the property. Real Estate Investar can be a great one. It pulls a lot of properties that are out there on the market together in a single portal.
There’s just so many opportunities out there with the internet being what it is. Great source of information, and a very quick and accurate way of doing due diligence. Due diligence is so important. It’s very important to know if the site you’re looking at has some issues that you need to deal with. There are some tools that I’ve shown you today, learn how to use them, look them up, get familiar with accounts and websites—Dial Before You Dig, sign up there—and it might get your life a lot easier.