Metropole properties

[always_learning]

Unlike McDonalds which is basically run by teenagers, property development I think required very specialized local knowledge, interpersonal skills, "industry presence" and buckets of integrity that takes many years accumulate. One of my risk factors is my overdependance on Metropole and Metropole's core "is" Michael Yardney. If MY chokes on a chicken bone, then I believe I will have difficulty taking over and completing the project on time and on budget.

Thus to expand Metropole would need to attract some very experienced and capable area managers etc, but I agree if it could be done it would be great.

 

[Michael Yardney]

Originally posted by always_learning
Unlike McDonalds which is basically run by teenagers, property development I think required very specialized local knowledge, interpersonal skills, "industry presence" and buckets of integrity that takes many years accumulate. One of my risk factors is my overdependance on Metropole and Metropole's core "is" Michael Yardney. If MY chokes on a chicken bone, then I believe I will have difficulty taking over and completing the project on time and on budget.

Thus to expand Metropole would need to attract some very experienced and capable area managers etc, but I agree if it could be done it would be great.

Metropole is much more than Michael Yardney and if I choked on a chicken bone it would carry on because I have painstakingly built a great team around me. I'm in many ways the figurehead here on the forum, but our clients know the rest of the team. There are 8 of us in the office and a heap of contrators and subcontractors on site.

You are right always learning - getting the right people is very hard, but criitical to the growth of our company.

I have 2 partners in Metropole - my wife Pam and Gavin Taylor who is an architect by profession and has been in property development as long as I have. His experience in major projects has added a great depth to out team.

I have another partner in our construction company - a registered builder - and a licensed estate agent as a director of Metropole Property Management. So we are slowly building the best property team in Melbourne

By the way thanks everyone for all the comments - its interesting being talked about in public

 

[always_learning]

Didnt god say "Now go forth and multiply?", take a leap into the Sydney market!

 

[agent007]

Hi Michael,

Last time you visited Syd you said that you may be doing something here too. Am I right?

Cheers,
James.

 

[agent007]

Originally posted by always_learning
So far I am happy and satisfied with my dealings with Metropole, naturally I am looking forward to the profitable conclusion of the development and am looking forward to giving them repeat business.

always_learning,

Was wondering if you could kindly provide an update on this project? (things to do/expect, what not to do or expect?.

Thanks,

James.

 

[always_learning]

Once the project is complete I plan to write a full account.

Negatives

Completion Time: The project was commissioned in Jan 2003, at the time the feasibility study at the time estimated Nov 2003 completion. Now we are in Jan 2004 and the project is tracking towards Mar/Apr 2004 completion, so it is running late, but it is moving forward. However problems happen for example I had a builder rewire and replaster one of my IP's, he ran three months late just for that job. I really did want to have the project completed in 2003.

I may not be so upset if prices are going up, but as of Dec 2003-Jan 2004 naturally there has downward trend on values so this is really putting pressure on the margin particularly after pay GST on the sale. Note that the feasiblity study provided by Metrople doesnt include GST costs in the "Development Sales" value of the completed project, this could be 3-5% of the project if you sell. (tip you dont have to pay GST it if you keep the project as IPs)

Costs: Costs from the initial feasibility study have escalated around 8%, some of this is due to unforeseeable reasons (muddy soil at the back), some of it appears that the estimated costs for some components where optimistically low.

Positives
I have found Metropole as a company to be excellent to deal with.

Micheal Yardney really knows his stuff, simple example for example he took photos of the neighbors properties before construction, sure enough neighbors complained that the construction cracked their garage walls, Michael Yardney was then able to prove the problem existed before construction. If I did a development myself I wouldnft have thought about it...and it would have cost me !

One of my biggest worries is that there could be some type hidden collusion between Metropole and the builders/consultants ie. "profit sharing without my agreement". I have found this has not been the case. After one year I believe Metropole does live up to the standards of conduct I would expect.

----
The best time for a review would be after completion. Presently I would offer the following advice:

• Metropole cannot control the market; they cannot remove that risk from the development. This is your risk and yours alone. Remember a 20% profit that takes two years to get could be actually worse than doing 2 10% margin developments that take 1 year to complete. However make sure the project you select has a healthy margin, the margin in many ways is your insurance you from any downward market trends
• In the feasibility study there is a contingency margin for increased costs, I found it not to be enough
• Trust but verify. I think you can trust Metropole but it never ever hurts to verify as much as you can any of the items in the feasibility study. Michael Yardney always to the point of annoyance suggests the same.
• Metropole charges 5% for a development, if you consider what is envolved in running a development I think it is a bargain; a REA will charge 2-3% just to sell a house, a buyerfs agent 2-3%, Metropole does everything and only charges 5%. Yes 5% is a lot of money, but worth it unless you have experience and the time to do it I also heard from a mortgage broker that by having professional manager run the project can get a project funded.

Once complete the test will be gKnowing what I now know, with full 20/20 hindsight would I repeat the same project again?h

 

[agent007]

Thanks for your replay!. Will wait for final outcome.

All the best,

James.

 

[Sunstone]

Dear AL,

Your openess is always welcomed.

Remember development projects ALWAYS take longer than what you expect them to do.

Hence the importance of "Persistence and Patience".

But also think about some of the satisfaction when you visit the site........... and say "I did that."

Cheers,

Sunstone.

 

[geoffw]

Originally posted by Sunstone
also think about some of the satisfaction when you visit the site........... and say "I did that."

And also the satisfaction when you count the profit

 

[always_learning]

I have been in Japan too long! if you order a basic house or 50 story office building (I have a friend in the big development business) and the construction company says it will be finished 29-Sep, they mean it, you can order a year in advance for the delivery trucks to arrive on the 30-Sep 9am and start moving in! Oh yes, construction costs in Japan are 2.5 times the price of Australia...! A Toyota, Mitsubishi or Panasonic home will cost around AUD$2700m2.

In the Computer IT world of course development schedules are allowed to slip...it always takes longer than we (IT) say! Or if you do push it to be delivered on time we will "leave out bits". Imagine the development in which it was completed on time, then you asked "where is the toliet" and the developer said well we were running out of time so we decided to leave it for phase 2, just us a portaloo for the next 2 years

 

[investor]

A Toyota, Mithubishi or a Panasonic HOUSE ?

Hmmm I might start a new line of HOLDEN houses, the with the HSV having quality inclusions with a 300kw air con.

Reagards

Investor

 

[Mrs Bird]

Thank you so much AL for all the information you have posted so far about Metropole Properties.

There are a few general questions I would like to ask you, Michael, or anybody else on the forum who can help.


1. Did you find your own property to develop with their recommendations or did they source the property first with you having to buy it of them. Otherwords are you able to negiotate the best deal yourself or was the price fixed?

2. What type of loan/finance was required for you to take out in order to complete the development side. We are seeing our bank on Tuesday about this but I am interested in how other people go about it. For example is a development loan different to a housing loan?

3. You mentioned in your posts that there was delays in the building process. Did you factor this into your costs?

4. Are you planning to Hold all 3 Townhouses?

Sorry for all the questions but I find this thread so valuable and have graded it accordingly.

Thanks Mrs Bird

 

[always_learning]

Mr Bird please see my comments below

Originally posted by Mrs Bird
Thank you so much AL for all the information you have posted so far about Metropole Properties.

There are a few general questions I would like to ask you, Michael, or anybody else on the forum who can help.


1. Did you find your own property to develop with their recommendations or did they source the property first with you having to buy it of them. Otherwords are you able to negiotate the best deal yourself or was the price fixed?
At the heart of metropole is not a development company that builds and sells properties to you the investor, Metropole is a services company ie. for me they are a project management company, ie I pay them to manage a property development. In my case metropole located an existing property with development permits, however it was up to me to buy it or not, it was not owned by Metropole. If you have a property you think could be developed again they will manage the development for you. Again Metropole does not profit from anything except the fees they charge you. If I had found any evidence that they take kick-backs etc, ie. if they made money from my development in any other way except for the money they charged me I would have never have proceeded with Metropole.


2. What type of loan/finance was required for you to take out in order to complete the development side. We are seeing our bank on Tuesday about this but I am interested in how other people go about it. For example is a development loan different to a housing loan?

In my case development was fully funded from my LOC (against other IPs) plus selling shares, there is no finance on the development. However development finance is the normal course of action. I know metropole has contacts at a few banks eg. NAB that specialize in this process would make life easy.


3. You mentioned in your posts that there was delays in the building process. Did you factor this into your costs?

No, I am just "sucking it up" It not huge money, but every $1K extra comes straight out of the profit margin.


4. Are you planning to Hold all 3 Townhouses?


Actually in my case it is more complicated. My friend will own one and he was always part of the development process, I will sell one (Mr AL orders), and I hope keep one. Naturally I didnt do this to make a loss, however the real reason is to understand the process and see for a smallish project if I would trust them with a larger projects. For me this project was planned to be the begining of many!

Sorry for all the questions but I find this thread so valuable and have graded it accordingly.

Thanks Mrs Bird

 

[geoffw]

I've been impressed with the Metropole approach myself- it is something I will be looking at seriously when I am in the position to move.

 

[Mrs Bird]

AL thankyou so much


As I mentioned before, you sharing your experiences with the forum as a novice property developer will hopefully benefit so many people who aspire to do the same.

I will look forward to reading about more about your project once every thing is completed.

Mrs Bird

 

[agent007]

Hi Al,

Wanted to check with you the progress of this project. What's the outcome? Are you happy with it?. Would you do it again?

Regards,

James.

 

[geoffw]

I'm not sure- but this post may provide a partial answer.

 

[always_learning]

Hi Al,

Wanted to check with you the progress of this project. What's the outcome? Are you happy with it?. Would you do it again?

Regards,

James.

Well, it's in the end game now with the development, construction is completed and handed over from the developer I should be geting the keys any day now.

I think Micheal would agree with me that that in regard to the projects full cost, length and final values I could only report bad and disappointing news. However to be fair to the many good employees of Metropole, I hesitate to comment further on this forum without the final figures.

No, I wouldn't/couldn't do it again. Mr AL (Mr "lets invest") is very dissapointed and Mrs AL (Mrs "work hard save money") hasn't stopped saying "I told you so".

 

[Aceyducey]

No, I wouldn't/couldn't do it again. Mr AL (Mr "lets invest") is very dissapointed and Mrs AL (Mrs "work hard save money") hasn't stopped saying "I told you so".

You learn more from your failures than your successes.

Or so a three-time loser once told me

Cheers,

Aceyducey

 

[see_change]

I think Micheal would agree with me that that in regard to the projects full cost, length and final values I could only report bad and disappointing news. However to be fair to the many good employees of Metropole, I hesitate to comment further on this forum without the final figures.

(

AL , Sorry to hear that , would be interested in hearing more about the reason for this. Was there a blow out in costs or just a drop in final value , or a combination of both.

See Change