Australia’s Billion Dollar Property Developer, Bob Andersen, explains the process of property development site demolition.
Hi, Bob Andersen back again.
Today I would like to talk to you a little bit about demolition.
What’s that all about?
WHAT USUALLY HAPPENS AFTER PURCHASING DEVELOPMENT SITES?
Quite often when we buy development sites, there would be a couple of things that might most likely to happen:
- There might be an existing house on the property and we might decide to keep it there. It might need renovating — in which case, we’ll do that — and potentially there could exist something we can put in the backyard.
- It could be another house, could be a duplex.
- If the land is big enough, it could even 2 or 3 townhouses. That’s leaving the old house on the side.
But quite often, it might be that we need to demolish the property — demolish the old house so that we can do some new townhouses.
DEMOLITION CASE STUDY OF OUR FOUR TOWNHOUSE PROJECT
That was the case actually with the particular project we’re talking about, our case study, our four townhouse project. The house was pretty dilapidated, I can tell you. The whole plan was to knock it down and build four new townhouses.
When it comes to demolishing, well, obviously there are experts, they’re demolishers.
HOW TO FIND GOOD DEMOLISHERS?
You might get a referral, the builder might know a good demolisher, you can go to Google and find demolishers — there’s all sorts of demolishers I guess.
What I found about demolition though, is that the price can vary enormously. I found up to 300% variation on demolishers quoting on the same job. It seems to depend on how busy they are. If they’re busy, they can give you a very high price. If they’re looking for work, they’ll give you a tight price.
So it’s always worth getting a number of quotes from demolishers.
WHAT IS THE MUST-DO LIST FOR HOUSING DEMOLITION?
1. You Need A Demolition Permit
In most places, a private certifier can get you a demolition permit to knock your house down, in some cases, it could be the council. In most places, private certifiers would do that. You need a demolition permit before you can demolish a property.
2. You Need To Get The Services Disconnected
For instance, you need to get the power authority to disconnect the power. Whoever looks after the water, a particular water authority, well they need to disconnect the water and sewerage and so forth. You need to get those services disconnected including the gas supplier to disconnect the gas.
That’s pretty important. A good demolisher would obviously check that out first, the last thing you need is a demolisher to go in there with an excavator and find the electricity is connected — a ‘barbequed’ demolisher is not good — clearly you don’t want to do that!
So make sure you get your services disconnected — this is very important.
3. You May Need To Get The Services Disconnected
It might be that there’s some asbestos in there, that’s quite common to have asbestos in buildings. If that’s the case, then your demolisher needs to have an asbestos license as well.
YOU CAN LEARN FROM MY DEMOLITION MISTAKE BELOW
You can ask to see that. I can remember a job — I actually slipped up — it’s a little while ago now. I got a guy to do a job….
The price he quoted was good but I didn’t check him out well enough and I didn’t realise he didn’t have an asbestos license.
So he’s in there banging this place down, filling up a big skid with asbestos. The relevant authority — somebody must have dogged him in — one of the neighbours came around looking for him.
He’s fortunate, he wasn’t there — they saw the asbestos in the tin, started chasing him, he’s ducking and weaving and on the run. Then they started chasing me. I worked out what was going on — I’m ducking and weaving as well!
Anyway, the guy got back, covered it out, finished the demolition, and it all sort of died down. But what it did teach me is to be a little bit more diligent when I’m checking out my demolisher.
If it’s got asbestos, make sure he’s got an asbestos license, or I’ll chase the demolisher. If I can’t get in, I’ll chase you!
4. Make Sure There Are No Tenants When Knocking Down The House
Another good thing as well — and, this is really the demolisher’s job — is make sure that there’s no tenants in.
So a good thing with your demolition is make sure to get your tenants out of the building at the right time. But first of all before you disconnect the services, tenants they stop paying rent after you disconnect their power, water and their sewage.
Obviously, it’s a timing thing, I may be joking here, a bit making light of it. But you need to time the exit of your tenants with the closing down of the services.
Make sure that you don’t have any tenants in there when the demolition starts.
LEARN FROM THIS FUNNY BUT DANGEROUS STORY ABOUT PROPERTY DEMOLITION
That might sound funny to you, but I actually had a house once I got demolished, pretty good price. The guy moved in early at about 7:00 in the morning, started to demolish the house. It’s a big old dilapidated house, nobody have lived there for about 6 months.
What I didn’t ask, and he told me later is just as he was starting to smash the thing down with a massive excavator, a guy flew out one of the side doors. Poor guy he was a beggar, obviously someone living on the streets, had decided to move in there and made it his house. The demolisher hadn’t gone through the house to see if anybody is in there, started to demolish it, and this poor guy could’ve easily been buried.
So hopefully, always remind your demolisher to have a good look through there first.
5. You’d Better Get A Dilapidation Report
Another thing we get is actually a dilapidation report.
A quantity surveyor can get that for you, it’s only about $400.
What you do before you start building, they’re going to be taking lots of photos of your site, and they take photos of the adjoining site. They take photos of the houses, any walls, any retaining walls, any driveways of neighbors, and they do it again at the end of the construction. It comes at handy sometimes, dilapidation report, only $400.
WHY DO YOU NEED A DILAPIDATION REPORT
Let’s just say, during the course of construction, one of the neighbors comes up and says, “Oh look, my driveway’s cracked! Maybe your concrete truck’s driven on it.” or maybe “You’re disturbing the ground, I need you to fix my cracked driveway.”
Well, in your dilapidation report, you would have photographs of their driveway. You would know if it was cracked or not before construction. I just give you that by way of example, same thing as with parting walls, retaining walls.
It’s a great way of not having to get involved with neighbors who want to fix something that wasn’t really the builder’s fault, or your fault. So dilapidation report’s a good thing.
5. You Need To Get Temporary Fencing Up
The other thing is, once the demolitions happened, what you want to do is to get temporary fencing up straight away to keep everybody out.
You need it for insurance purposes, in fact you can get insurance on a vacant block of land.
It’s quite cheap. You should have public liability insurance if you’ve knocked the house down, but the builder hasn’t yet moved in. Once the builder moves in on site, his insurance takes over.
But you can have a period of time, you have demolished the house, so you no longer have a house insurance. The builder doesn’t start for three weeks, so you got no insurance. Anybody can wander onto your block, do something crazy, and have a shot at you.
It’s very cheap to get some public liability insurance — a good thing to do. Also a good thing to do, is once the demolished has been — demolished the house — get some fencing up straight away. Now, it might be that you already got a building contract in place.
In fact, it might be that the builder’s going to do the demolition as the first part of construction, no dramas there. But if you’ve got a period of time, between the house being demolished and the builder starting, you might not have a fence up.
LEARN FROM MY FENCE UP MISTAKE WHEN DOING THE HOUSE DEMOLITION
That happened recently with us. In fact, this particular project I’ve been talking about, our case study, we’ve got the house demolished, but the builder couldn’t start for about 3 weeks.
So we had a period of time where the house is gone, the site’s cleared, no fence up, you wouldn’t believe it.
Come time for the builder to come, we meet the builder on site, all of the sudden we’re walking over the site, we’re thinking, “Geez we feel higher than we did last time. What’s going on here?”
Then we realised what have happened: Somebody have dumped a whole heap of fill on our block. There’s so much construction going on in the area, we drove around trying to work out who it might be, but gave up ‘cause there’s so many holes being done.
Somebody from another site has loaded up about 18 truckloads of soil, brought it over to our site and dumped it on our site because we didn’t have a fence up! In fact, not only that, they did go in the trouble of spreading the fill and compacting it. They actually pulled in machinery and compacted the fill. Amazing stuff.
The problem with us is, we didn’t need all that fill. The builders and I would’ve used a bit of it, but it cost us $8000 to get rid of all this extra fill. I tell you, it’s not a good way to start, $8000, because somebody’s dumped fill on your site. That all came about, by not getting the fence up straight away. So here’s a little case study for you on a case study—don’t do that.
I look forward to the next episode. I hope you’re really enjoying this, see you soon!
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