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Site Acquisition Process

By Amber Khanna | Property Development Due Diligence

Site Acquisition Process


Site Acquisition Process

Little Unknowns that make a big difference when purchase sites for property development

Site Acquisition Process

Once you’ve found a potential site, you may think you’re in the clear, but you’re not quite there yet. If you want to know how to become a property developer, you first need to carry out property development due diligence analysis

For further learning, consider property development courses.

What Is Site Acquisition Process?

In short, Site Acquisition Process is an extensive look into just how safe or risky a project is. You must consider every potential factor in the site acquisition process to have the make sure you have the best possible information. 

When it comes to deciding if the project is worth the risk of investing, there are three main avenues of investigation are:

  • Potential engineering issues
  • Potential planning and tenure issues
  • Financial analysis

Engineering

Potential engineering issues cover a wide variety of physical concerns, both in terms of where exactly your development will affect and how it will be affected by natural phenomena.

Environmental and Heritage

A small number of properties are affected by governmental regulations regarding environmental and property concerns. However, the penalties for violating those regulations can be quite steep. Therefore, it pays to investigate any potential environmental or heritage issues with your property at every level of government (federal, state, and local) to determine if there are any potential conflicts. If there are, then the consequences could range from a total ban on development to restricting development to minor cosmetic changes.

Flood

In areas where floods are a realistic concern, some land will have certain restrictions as a result. Contacting local authorities should give you quick and easy information regarding whether parts of the site will be affected. If parts are affected, then you will need to determine if the unaffected areas are big enough to accommodate your plans. The additional costs of protecting against floods and paying for insurance may be enough to tip the site away from profitability.

Geotechnical

The content of the ground is an essential factor for every possible development. In the worst-case scenario, unstable earth or dangerous contaminants in the soil can completely prevent progress until extensive work is done. However, even if a geotechnical survey before you purchase the site doesn’t reveal anything, that doesn’t mean the money was wasted. The results of the survey will still be needed when it comes to designing the foundations for your development.

Mining

In areas where mining activity either is currently happening or happened at some point in the past, you’ll want to know exactly where and whether your site was affected. The construction and collapse of mining tunnels can shift the ground, leading to instability and the possibility of a sudden shift in the future. The last thing you want is for a nearby tunnel to collapse at some point in the future and compromise your foundation.

Utilities

When it comes to utilities, there are a number of different factors you will need to consider. First, you will need to consider if any water, power, or communication lines run through the site and how they would factor into your development plans. Second, you’d need to figure out how to incorporate your development into the utility grid and how easy or difficult that would be. Third, you will need to ensure that local utility providers have the necessary capacity to support your business.

Rainwater (Stormwater) Discharge

All properties must have a legal point of discharge. You will likely need to specify a point of discharge in order to get a development permit, but some permits do allow some leeway in how soon the point of discharge has to be set up. If a site has no viable point of discharge or if the only options would interfere significantly with your development plans, then you may need to look elsewhere.

Planning and Tenure

Once the physical concerns are out of the way, you will have to deal with paperwork and regulations regarding ownership.

Titles

When evaluating the title to the site in question, there are a number of details that you should pay particular attention to. For example, whether there is an easement could substantially alter your plans for the land. Whether there is an encumbrance could determine just how profitable the venture would be, while any unregistered dealings could play a significant factor as well. While title issues wouldn’t necessarily affect your plans as drastically as an old mine shaft beneath the site might, you still want to know as much as you can before you commit.

Zoning

Contact the local government to get details on city zoning laws for the site acquisition process. If the regulations conflict with your plans for the site in question, then you want to know as soon as possible so that you can either search for a new site or negotiate with the authorities. You may be able to turn your plans to a type of development that would be acceptable to the current zoning laws or they may even be willing to make adjustments or exceptions to the zoning laws themselves.

Searches

Some additional searches can come in very handy and save you a great deal of money and stress down the road. A lawyer can help you obtain relevant searches related to land titles, electrical authority, Land Tax, Contaminated Land and Environmental Management Register, Mines and Energy, rail, rates, Environmental Protection, and Main Roads. A battery of searches can help you quickly identify problems and deal with them before they can sneak up on you.

What To Do Next

Once you’ve assessed the site, you’ll need to take a closer look at contracts and what sort of terms the sellers are willing to offer.

If you would like to learn more about property development, check out my extensive list of Property Development Courses or my must-read on How to Become a Property Developer and How To Get Started In Property Development.

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About the Author

Property Developer | Educator | Entrepreneur Experienced in Development Management, Financial Modelling, Land Acquisiion and Development Finance.

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