Hey all – Newbie here, sorry if my info. / questions are vague
I am currently looking at buying land through vendor finance, in order to construct 7-9 units, and sell (as many we need to pay back loans, put down a deposit on our PPOR and keep the remaining units as investments).
I have a FEW (lol) questions and was hoping Australian’s version of Donald Trumph is browsing though this forum, ready and waiting for my questions.
Here Goes:
I am early on, i.e just preparing my consultants to use, and get estimates of costs.
Risk Management Report
My question is, has anyone got any experience, or could they recommend an EXCELLENT risk assessor is the Brisbane area.I understand that I have to carry out a Risk Management Report, to the financier, and I understand some of the Risks involved. It is early on for me, but at the same time, I want to be prepared and have spoken to and KNOW what risks I will come across, straight from the best horses mouth. Obviously, he / she can not tell me the exact risks that I will come across until I give them futher info. (i.e. land, location, demand, etc etc, I do not have a site in mind yet), but I just want to sit down and have a chat with someone at this stage, to keep myself on top of things. Better to be early with work and have it sitting there, than running around at the last minute.
Builder
Any EXCELLENT recommendations, for a builder in the Brisbane area.Insurance
Could anyone please give advice as to what type of insurance I would need for the following:
Land?
DA / BA Costs? – doubt it
Construction?
????????Thank you all for reading, and look forward to any advice given
Kind regards
hi there – have you done your intial feasibilty analysis on this proposal? You say you want to make a deposit on a PPOR AND keep units which sounds very ambitious… its fantastic if you have found this opportunity though. If it is such a good opportunity I would wonder why the vendor is offering you finance and not doing it themselves? Presumably you are getting vendor finance on the land, are you providing the funds for the construction? Remember you need to pay GST and tax on any of the units you sell, then apply those after tax funds to your other purposes.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
You are moving in the right direction by considering who should assist you with this project at an early stage.
But first, you mention buying land by way of vendor finance, and building 7-9 units. Then you add “I do not have a site in mind yet”.
If you have not located a suitable site and commenced discussions with a vendor re: finance, then this should be the priority.
You may find it difficult securing land under this arrangement, and unless there is an alternate finance option, time and energy spent locating advisors in the current phase would be wasted.
[remember, time = money/opportunity].
Second, forget using anyone who positions themselves as a “consultant” – unless you are prepared to pay unnecessary costs.
Consultants generally provide input/recommendations at an early stage – but do not participate from start to finish.
You want people involved who are responsible for their recommendations from day one through until the project is completed.
This is why the typical development team is comprised of an architect, quantity surveyor, engineers, project/construction manager, and other professionals who contribute to the overall planning and success of the project during various phases.
In terms of the 7-9 unit preference, until you have located a suitable site, there is not much point focusing on a specific number of units.
You may find a suitable site capable of building 7-9 units is not feasible. Or a site which allows 15 units, for example, is within your budget.
Keep in mind the perfect site could be located, with positive discussions underway with the owner, only to find there are planning issues preventing x number of dwellings or other zoning restrictions.
The feasibility study will help determine a sites “best use”, which conincides with what you are able to build by right, as determined under the zoning regulations.
A “risk management report” is not necessarily what you require before meeting with a financier. Furthermore, a “risk assessor” is not who you require to prepare this information.
You will need to conduct a lot of the ground work yourself, i.e. researching zoning issues, market research and getting a feel for the cost involved. If you were to hire people to do this, it can be very costly – when there is no guarantee the project will move forward.
The next step is working with an architect – I don’t recommend a draftsman/builder for a 7+ unit development unless they come highly recommended.
The architect will discuss what can be built on the site, subject to further research, [this assumes a site has been located] and provide an idea of possible concepts. The architect will also assist with and advise on zoning/planning issues.
If not proficient yourself, you then require someone to conduct a “market feasibility study” and cost analysis [cost feasibility study], to determine 1. if there is sufficient demand for your product, 2. if the project is feasible.
This stage typically follows discussions with the architect, although if you feel confident in your experience and planning, you can move on to the feasbility stage without an architects input.
But do not cut any advisor out as a cost saving measure if you are not proficient in any aspect – this is a recipe for failure.
If you have someone conduct the feasibility/cost studies, I recommend using people who work with the architect you have chosen. Either independently, or part of the same office. Aside from architects, quantity surveyors generally offer this service.
Try to limit the number of people/firms involved in your project to as few as possible. And as noted above, it is beneficial to use people/firms that are contributing, and therefore responsible, from start to finish.
Once you have completed the feasibility studies – and assuming the outcome is positive, you will work with the architect on an intial concept – to determine the general scope of the project, which should include drawings.
This information is then handed over to a QS [quantity surveyor] who prepares a cost breakdown. Again, it is recommened that the QS has worked with the architect in the past.
When you have the land secured under contract, feasibility studies completed, a scope of work including concept drawing, and a detailed cost breakdown from a registered QS, then you can approach a financier – if an institutional lender.
It is strongly recommended that the QS has a very good reputation and track record – ahead of the architect, if you plan to approach a bank.
In terms of a builder, this is the least of your concerns until the above has been completed.
Locating a builder generally conincides with the completion of the QS report. The architect will prepare contracts, etc and submit the job for tender to a select group of building contractors.
My recommendations are based on conducting a multiple dwelling development in a way that limits your risk as much as possible.
There are of course short-cuts and ways to avoid certain costs, but as noted, each short-cut or cost saving which is important to the overall success of the project i.e. professional services, will increase your risk and chance of failure.
— Michael
You must be logged in to reply to this topic. If you don't have an account, you can register here.
