A Monthly Success Video from Australia’s Billion Dollar Property Developer, Bob Andersen.
Hi everybody! Welcome back, again. Bob Andersen here with some more exciting gives and takes on property development.
If you’re looking at acquiring a building, now this is what you’re going to do a simultaneous project is my word. We get back to our standard three-townhouse project. It’s very important to get the right builder. You probably heard some horror stories about builders if you’re watching any of those current affair programs after the news during the week.
It’s pretty good sprinkling of builders and always naughty builders and bad builders and you could get the wrong idea watching that and think that all builders are bad because it’s always the bad ones that get the publicity. There are so many good builders out there and it’s really important to get the right builders.
So, what is the right builder? The right builder will be somebody who is experienced building a tougher product that you want. For instance, let’s say some two-story townhouses then you want to build it as regularly does. Not just somebody does houses but somebody who regularly builds townhouses, so that’s the right sort of builder and obviously, quality and price. That’s important too. In other words, good value.
A builder could build at a good price, build a good quality product and its experienced in that topic and instructions. Well, that might be theoretically what you need, but how do you find those sorts of builders? Where can you go to get on some good builders? It’s very important.
As well as that, of course you need a good builder that will help you with your pricing as well. How do we do that? Well, there are a couple of different ways. Most likely, you would be dealing with an architect or perhaps a building designer, getting your approval sorted. Now, architects often make good builders and with regards to architects, they just don’t do designs. Obviously, they can do the design for your building approvals like they do a detailed design for your building permit or your construction certificate. But they have other skills as well.
Architects as well can run tenders. They can help tender for a builder to select the right builder and they can also do what we call, “contract administration” where during the construction phase, they actually go up on site and check the builders working and he can handle the contract. So, architects that do that, architects that call for tenders, and also architects who go to site inspections, they will be meeting builders.
So, they will be first of all saying which builders are winning tenders. They’ll also be saying what are the prices that are winning the tenders and of course when they go out on site to inspect, they’ll be seeing which builders are doing quality work and whether they’re on time and on budget. It’s important that the builder is on time and of course on budget. So, architects, building designers and sorts of people that do that can be a very good source of recommendation for builders.
Now, in your particular area that you’re concentrating on, whenever a development is starting let’s say construction site for some townhouses and apartments, whatever it is, after the approvals have gone through, you’re going to see a fence. It’s one of the first things to happen is a builder will put up a perimeter fence. So somewhere in that fence on the front of the property, you’re going to see the builder’s details. Now, any builder who is building townhouses in your area, you need to contact them. You need to know them. And so you’ll see the fence go up, you’ll see the sign go up and you need to contact those builders.
First thing you’ll say is of course, I just saw your sign go up. I can see you are doing a townhouse project. By the way, are you a builder/developer where you just build and develop yourself or do you build for other developers? That’s a very important first question because some builders build for themselves. Well, they’re not going to be any help to you. But builders who build on contract, you need to talk to them. As a matter of making time and getting out there and having a little chit chat with the builder and say, I’m always looking for a builder. Can we catch up? That’s an opportunity of course to have a look at the builder, have a look at the building on site and have a look at the plans and you can even talk about the pricing. So, that’s great as well.
Now, another way that you can get good builders is through the building broker. I’m not sure if you know that. I’m sure you’re familiar with finance brokers. Finance brokers, what do they do? Well, they find finance to suit your circumstances. Building brokers are no different. Building brokers find a builder to fit your project and not all builders are the same.
Some builders build small projects, some builders build larger projects. Some builders might go and say, look, I don’t build more than five townhouses. Other builders might say, I don’t want to build less than 10 – larger builders. Some builders build townhouses, some builders build apartments. Some builders build one or the other or both. That’s important.
Some builders geographically build on certain areas. Some builders want to build on the south side of the city but not on the north side. So, geographic, size, tops the buildings as well. They all vary.
So, as a result, a good building broker will have on his books a range of good builders, proven builders, builders that the brokers worked with before, builders that have done due diligence on. And building brokers are charging fees of course. They don’t do it for nothing. They charge generally about 2% of the building contract price but that becomes a part of the building contract itself.
So, as the builder gets paid let’s say each month or whatever, a part of that will be the building brokerage fee. It’s a small fee and of course there’s no reason why you can’t still source your own builders and at the same time have a building broker so it’s the same builder as well and look, whoever comes up with the best builder wins.
These are a few good tips on finding a good builder. All the best builders are there.
You just have to get out there and have a bit of a good look.