I don't do things by halves and my first property investment is proving to be a big project and would be interested in some opinions.
Blue-chip inner Metro location
House with land (demolishion job): $1.5m inc costs
Plans and permits for 2 high end architect townhouses
Build quote just under $2m inc GST (a very complex build with a basement and high-end finishes)
I have inherited the project from the previous owner who ran out of money. There are alot of things left half-done and people left unpaid. I also have to contend with:
1) debts and fees racked up by previous owner and unpaid (architect, engineer etc)
2) easement issues
3) specifying fixtures and fittings
4) engaging, negotiating with and quality checking builders work (I intend to redo the previous owners specification and quotes as the costs are very high).
I have put aside 10+ hours a week outside of work to work on the project for the next 2 years. I expect a steep learning curve. The end value should be > $4.5m if done right.
I have a friend who is a part-time developer who has successfully managed 3 or 4 large projects which were financially successfull. He has started a project management company and is proposing to take on management of the project.
What I like about his proposal is:
- he has already pointed out a number of areas where money and time can be saved and is frugal with money.
- he is a strong negotiator and will likely negotiate more succesfully than I could alone.
- he has skills and knowledge he is willing to teach me as we go along.
What concerns me about his proposal
- fees of around 7% of the total build cost (which will equate to over $100k), some incentives for keeping build cost down are added.
I think if I embark on this project alone my "learning curve" mistakes will cost me a large amount of money. However, given that I want to put my own time in is $100k+ reasonable for this sort of project? I understand architects charge 10% just to supervise the build, whereas I'm getting a full package of services for around the 7% mark (I think I can likely negotiate a better deal).
Thoughs?
Blue-chip inner Metro location
House with land (demolishion job): $1.5m inc costs
Plans and permits for 2 high end architect townhouses
Build quote just under $2m inc GST (a very complex build with a basement and high-end finishes)
I have inherited the project from the previous owner who ran out of money. There are alot of things left half-done and people left unpaid. I also have to contend with:
1) debts and fees racked up by previous owner and unpaid (architect, engineer etc)
2) easement issues
3) specifying fixtures and fittings
4) engaging, negotiating with and quality checking builders work (I intend to redo the previous owners specification and quotes as the costs are very high).
I have put aside 10+ hours a week outside of work to work on the project for the next 2 years. I expect a steep learning curve. The end value should be > $4.5m if done right.
I have a friend who is a part-time developer who has successfully managed 3 or 4 large projects which were financially successfull. He has started a project management company and is proposing to take on management of the project.
What I like about his proposal is:
- he has already pointed out a number of areas where money and time can be saved and is frugal with money.
- he is a strong negotiator and will likely negotiate more succesfully than I could alone.
- he has skills and knowledge he is willing to teach me as we go along.
What concerns me about his proposal
- fees of around 7% of the total build cost (which will equate to over $100k), some incentives for keeping build cost down are added.
I think if I embark on this project alone my "learning curve" mistakes will cost me a large amount of money. However, given that I want to put my own time in is $100k+ reasonable for this sort of project? I understand architects charge 10% just to supervise the build, whereas I'm getting a full package of services for around the 7% mark (I think I can likely negotiate a better deal).
Thoughs?
