Share

Property development guide part 16 – Digging in the dirt

[ad_1]

In this continuing series of articles, I’ll take readers on a step-by-step journey through the property development process.

You’ve selected your site, conducted your feasibility studies, gathered a team of professional industry experts to help you navigate the sometimes rocky road of property development, made your way through the council’s bureaucratic maze of red tape and managed to obtain finance for your project. 41378319 - house in construction project with brick and blueprint

There’s only one piece of the puzzle missing – the realisation of your development dream as a physical reality.

Turning the first sod of dirt and commencing construction of your project is perhaps the most exciting stage of property development.

All of your hard preliminary work is about to pay off as the plans your architect has drafted start to take shape as actual buildings or on your site; buildings that you will soon profit from by selling or tenanting them and enjoying the equity that will accumulate over time.

In this instalment of our series on property development, I will discuss the importance of selecting the right builder for your project and how to negotiate and understand the building contract.

So let’s get stuck into the nitty gritty of digging in the dirt and building your development dream.

Selecting the right builder

Sourcing the right builder to deliver your project can be a daunting prospect for the first-time developer.

There are so many options available, but which one is the best for you?

One way to narrow down the field is to seek a recommendation from friends, family or colleagues, or even your architect or development manager.

pencil icon

Note: The latter parties in particular may have the best advice because after all, they have worked with hundreds of builders in a similar capacity in the past.

You should make sure anyone you consider employing is a registered building practitioner.

This is important not just because it will reassure you that they are properly qualified, but they also require registration in order to ensure your project during the construction phase and until an occupancy permit is issued, as is their responsibility.

bulb icon

Tips: Request a copy of all the builder’s insurance certificates prior to allowing him to start the job.

This includes public liability insurance that notes you and your job as being covered for an amount of $10,000,000 as well as WorkCare insurance and completion guarantee insurance.

The latter insurance is required by the building surveyor prior to issuing a building permit and it is a statutory requirement that a builder provides completion insurance as well six-and-a-half-year structural guarantee insurance on all domestic building jobs.

pencil icon

Note: It is important to establish that the builder you are considering is able to deal with the type of project you are proposing.

The best way to determine this is to visit previous projects completed by them, which will give you an insight into the quality of their work.

It’s also advisable to speak with their previous clients to make sure they can deliver on their promises and are good to work with.

Additionally, it may be prudent to conduct a complete credit check of the builder’s commercial dealings so you know they have the financial capacity to complete your construction.

You can do this through a credit reporting firm such as Dunn and Bradstreet or Baycorp Advantage.

The last thing you need or want is a builder on the brink of bankruptcy pulling out of your project at the last minute due to their own financial issues.

Trust me – it can and does happen and has the potential to significantly delay developments and cause large budget blowouts.

Once you have decided on your builder you will need to give them a full set of working drawings, as prepared by your architect, along with a detailed set of specifications so that they can give you an accurate cost estimate to construct your project.

The plans and specifications must include all dimensions, materials, window schedules, services, joinery and surface finishes and should be highly detailed, outlining supposedly minor aspects of your project, such as how many telephone points, light switches or power outlets you want to be included.

Don’t be afraid to sit down with your builder and ask his advice on where he believes you could save money on your development from a construction perspective, or make the building process easier.

They can often provide ideas or insights into your plans that you and your architect had not considered.

While many builders will present you with a simple one-page fee outline, I recommend that you request and obtain a detailed proposal to ensure you know exactly what sort of bang you are getting for your buck.

The contract and specifications

Once you have found a builder you are happy with, it’s time to sign the all-important building contract.

There are two main domestic building contracts used in Australia; one is provided by the Housing Industry Association (HIA) and the other by the Master Builders’ Association (MBA).

[ad_2]

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *