hello fellow property investors first post for me.
quick question to those developers out there. I plan to get into property buisness in the future fair few years from now anyway as im only 21. im currently studing property economics and plan on entering the value adding property development business.
well Im asking this question as I have the spare time to undertake the course while I am at uni before I start my workingn career. so I understand im a 'noob' to all this if this question is considered ignorant
since im am new to all this was wondering would it be worth obtaining a building licence, and subcontracting the work would this be cheaper than for example masterton at $1000m2 if done with properly with reputable small contractors. and would it be easier to obtain finance or would the finance company request a third party builder estimate. I am aware I would have to register a building company and obtain insurance which i know is costly but havn't got a clue how much. and how does warranty work… is that purchased like an insurance or does the builder take this liabilty. and would this benifit me after tax.
so do many developers have thier own building licence im talking about small developers. (One project at a time)
so this is just some thoughts I am on the right track in obtaining a building licence or would it just be a waste of time as it takes 2 years at tafe and wouldn't benifit me at all.
if it is viable an finance would be made easier how many developments roughly would make it viable eg. gross turnover for the year or net before tax.
thanks to all that answer ahead of time.
( im a student and have been reading alot of post over a while and I find this site a great educational tool as its practical and provide information on the local markets then the text books we are reading) great work to everyone out there who is willing to help.
I think getting a builders licence is a very worthwhile thing to do. You will be able to go far once you get some experience and know what you are doing. One of my clients is a builder and he built a house last year with the valuation coming in at over $150,000 more than his cost of materials and land. (You can do this as an owner builder too, but most states limit how many you can do, in NSW I think once every 3 to 5 years).
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Annan,
getting a building licence frees you up to undertake as many projects as you want to as Terry points out. On the downside though, project builders are very cost effective so you will struggle to beat their prices on a standard design as compared to your own 'one off' project, you will still be quite competitive when it comes to doing something which does not match their standard spec.
Having a licence gives you options – you can buy, renovate and resell more competitvely than a larger developer, gives you the ability to walk the walk/talk the talk without getting down and dirty.
As for financial viability, you have to do the numbers. Insurance – call a broker to discuss your business plan/intentions (play it up that you are looking to start a business now and they will be more than happy to provide a quote for PL, WC etc). You may have to contact one of the Home Warranty Insurance companies regarding HWI (some will charge to determine whether they will cover your risk, generally they will require to secure that risk against your assets – HWI is compulsory on contracts exceeding $12).
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