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Many project builders make heaps of money off of their valuations.
In our building trade we meet people who have a massively low profit margin (5-10%). In the building game a lot of the time it takes one annoying council rule to wipe out your profit, or one apprentice to do something wrong and it is all over.
You will also note that when getting a builder in to do work for you, they are going to be pricing on the home ONLY. I cannot tell you how many times clients have come to us from places like Dixon and Metricon to get decks/patios/driveways ect, ect. put in because the builder did not do it. We have one customer who has their sliding doors locked upstairs so they do not fall through the non-existent upstairs deck.
It is true many builders make their money off variations and customer ignorance.
Another issue is that what you do before you even break ground can make or break your budget. Many project builders will get the client to talk to an architect separately, then price off the specs and plans. Problem with that is, the architect says one price and the builder says another… Then when you finally settle on that, you go to make an application with council/certifier and find there is a sewer running along the back boundary, and you are back to redesign and then re price!
My no.1 tip for finding a builder: Find a one-stop shop. What you need is a builder who provides:
3D visualisation
Ability to make changes to plans/specs cost free
ball-park figures with each change/update
constant contact with council town planners/certifiers
fixed priced contracts
soil test, engineer designs and energy efficiency
has the honesty and courage to tell you if what you are doing is stupid/waste of money and offer you alternatives.
If they don't give you this kind of service, run away. Project builders are a powerful tool but only when used correctly. It seems the only people who really know how are the big developers.
All very good points and I agree with a lot of what Freckle has had to say.
That being said, even IF Australia has overpriced housing/land/real estate, the banks and government will NOT let the prices crash. In fact, we have FAR tighter and stricter regulations in our banking sector than what America ever did.
What happened in the US was driven by bad government policy and horrendous regulations.
In Australia, I believe we do not have this. So yes, even if the market was overpriced (an argument can be made either way) it does NOT mean that we will see massive collapses like what we saw in the US.
Instead we are approaching a time of small movement, or stagnancy in the market. A time where you aren't going to realize massive profits from buy/sell strategies.
The major plan would be to focus on positively geared rentals, which is what we are doing. I would suggest in this sideward market you focus on INCOME rather than CAPITAL GAINS.
Hi Darryl,
We have actually found that the crux of this issue is in the definition of the term 'household'.
For contrast, here is the exact same term as provided by the Logan City Council: 'An individual or a group of two or more related or unrelated people'.
The amazing thing is that after receiving a 'show cause notice' we spoke to some council town planners who noted that the only way to lease out two areas on the same block of land and still comply with the planning act of the LCC is to have the secondary area classed as an 'annexed unit'. Which is a pretty straight forward process.
So for any property investors out there, I would be getting out of the BCC areas and hopping across (sometimes its a matter of walking across a road) to the LCC areas.
Just a thought to take into consideration.
Sean.
We are actually doing annexed unit developments in Logan City Council. They have no limit on unit size, and the house and unit can be rented to two separate families on the one title! We have been working with LCC for ages and our rentals are a minimum of $200/week positively geared.
We have around 4 we own at the moment, and our latest one is actually an executive style home in Tanah Merah with 4 bedrooms, and an 'annexed unit' (but really it is a house) behind.
If you want, PM me and we can get chatting, but dual living is a council by council issue. This is because it comes under the 'planning code' of each council rather than the 'building code' which is Australia wide.
The only issue at the moment is securing a loan from the bank (since the banks are pretty tight these days) a 20% deposit is recommended.
Check out buildersbrisbane.com for more info.
