My little Mona Vale development update - Phase 3
- Thread starter MichaelW
- Start date
Hi Guys,
I don't normally link my own posts, but this was just too prescient.
Its now mid-October and they're still not finished. I've been flying down fortnightly of late to try and keep things rolling but it hasn't helped too much. I documented the remaining four weeks work at the beginning of September based on the dates they provided but by the end of September they were denying providing those dates and saying it will be the end of October. It seems to go that way month to month.
I won't go into all the detail just yet as I don't want to prejudice proceedings in the remaining few weeks.
Its still a great looking little development. It will rent in a blink, and will still have a decent margin in it at completion despite all the setbacks. But the bitterness of this build has left us with a very sour taste in our mouths. We were planning on living in the downstairs unit at some stage, but the bitterness means that we will probably never do this now. We were also supposed to have built our new house in Bardon this year but have been living in a caravan on site now for 12 months waiting for this build in Sydney to finish. Three people in a 17'6" caravan for 12 months through all the stress of this Sydney build has tested our relationship to breaking point but we've pulled through, just... Hopefully we'll finally get going with that new build in Bardon in 2013.
Onwards and upwards. Its been a while since I posted due to the emotions involved. But I thought I'd update the good folk here on Somersoft who've been tracking my journey. I look forward to providing a thorough insite into the learnings of this project when I complete.
Cheers,
Michael
WOW!!! You are being very honest about how this build has affected your relationship but I'm glad you got through it. The past twelve months in a caravan must have been really tough.
Will you keep living in the caravan on site whilst you build? I hope you take a breather before tackling the Bardon build. I'm just wondering what happens if the Bardon build goes the same way as the Mona Vale build? Maybe buy a second caravan so you can each have some "me" time when things get you stressed
.When we bought the block behind one we own, giving us 72 perches (1800 square metres for those who don't understand perches
) with two street access, we went to a town planner who told us he could possibly get one house taken off (DCP) and we could put (I think he said) three townhouses in the back yards of the combined large block.He also told us that having never built anything before (though we have renovated many times) he thought getting someone in to build it and/or project manage it for us was money well spent. He said he had seen numerous "mum and dad developers" end up divorced after the stress, hold-ups and general problems with their first development.
We haven't done anything more with the block. One day a developer might offer us enough to make us decide to just sell and we can both make a profit.
Your story just makes me think what we decided was probably very wise.
It will be good to hear more details when you post them.
Thanks for sharing and good luck with the next little while until it is finished and rented.
Thanks guys,
I think I've played it pretty well and will sort out a successful completion shortly but it has been a very difficult process with this builder.
To Wylie's point, I did appoint a third party builder on a fixed price contract with liquidated damages in place and a detailed specification and scope of works included in the contract. But no matter how much you "insure" yourself against anything going wrong there is still risk involved. I've mitigated a heap of it, but still have to deal with a difficult builder.
My Bardon build will go a hell of a lot more smoothly because I am the builder. I'll engage trades directly and do some of the work myself. This is what we did in North Narrabeen and it all went very smoothly. Its only when I paid an additional 20% margin and put a "professional" builder between me and the trades that things went wrong.
There is more I could have done to mitigate risk which I will run through when I complete and I have the headspace free to look back with introspection. For example, I should have paid an extra $35K and stuck with my original architect instead of going with a cheapie for the Construction Certificate drawings. These ended up being very loose and only 8 pages in total which left gaps for the builder to try and weasle out of work. If I had detailed drawings showing reflective ceilings, bathrooms, kitchens, construction detail, integrated with plumbing etc then a lot of the ambiguity would have been taken out of it and a lot of the cost/time associated with that ambiguity.
There's more, but I'll save that for after I have my OC. The end of October is the current projected completion date, and allowing another month of blowout for this builder means I should have an OC by the end of November.
Cheers,
Michael
I think I've played it pretty well and will sort out a successful completion shortly but it has been a very difficult process with this builder.
To Wylie's point, I did appoint a third party builder on a fixed price contract with liquidated damages in place and a detailed specification and scope of works included in the contract. But no matter how much you "insure" yourself against anything going wrong there is still risk involved. I've mitigated a heap of it, but still have to deal with a difficult builder.
My Bardon build will go a hell of a lot more smoothly because I am the builder. I'll engage trades directly and do some of the work myself. This is what we did in North Narrabeen and it all went very smoothly. Its only when I paid an additional 20% margin and put a "professional" builder between me and the trades that things went wrong.
There is more I could have done to mitigate risk which I will run through when I complete and I have the headspace free to look back with introspection. For example, I should have paid an extra $35K and stuck with my original architect instead of going with a cheapie for the Construction Certificate drawings. These ended up being very loose and only 8 pages in total which left gaps for the builder to try and weasle out of work. If I had detailed drawings showing reflective ceilings, bathrooms, kitchens, construction detail, integrated with plumbing etc then a lot of the ambiguity would have been taken out of it and a lot of the cost/time associated with that ambiguity.
There's more, but I'll save that for after I have my OC. The end of October is the current projected completion date, and allowing another month of blowout for this builder means I should have an OC by the end of November.
Cheers,
Michael
Hi Michael
Kudos to you for your honesty in sharing so much of this journey- I trust at least some of your recordings here have been cathartic for you at the very least
Sounds like you will deserve a holiday with the family at the end of all of this as a reward for all you've been through. You remain ever the optimist and I wish you every success in moving onward and upward during the next few months!
Kudos to you for your honesty in sharing so much of this journey- I trust at least some of your recordings here have been cathartic for you at the very least
Sounds like you will deserve a holiday with the family at the end of all of this as a reward for all you've been through. You remain ever the optimist and I wish you every success in moving onward and upward during the next few months!
Hi Michael,
Thanks again for sharing. Much appreciated.
Quick Q - how did you get onto your current builder? Would you go down this path again (sounds like no).
How did you get up to speed with everything you need to know in terms of "managing the project" yourself. I wouldnt know where to start.
Thanks again for sharing. Much appreciated.
Quick Q - how did you get onto your current builder? Would you go down this path again (sounds like no).
How did you get up to speed with everything you need to know in terms of "managing the project" yourself. I wouldnt know where to start.
Thanks Jacque!
Yes, its been good posting on here and getting some of this off my chest. The support on SS has been great.
Matto, I must admit that I personally selected this builder as I had a previous relationship with them. Would you believe I met them through Somersoft! In future, I'd argue keep personal and professional relationships completely separate. I thought I could trust this builder so wasn't as rigorous as I should have been in my initial research of them or in getting a water tight contract. My contract is strong, but it could have been stronger. I never even saught a prior client meeting or reference check and relied only on a site visit of an existing client while they weren't there. The build quality was good, but I have no idea how long it had been going or how much over budget that reference build was.
Use third party professionals like your architect to assist with tender and builder selection.
Its not as complex as it sounds, and you learn a lot by just doing the process. Your architect will get you started on the right track and walk you through the approval and construction process and all the third parties you need to engage. Make sure you don't skimp on your early professionals. They are the backbone of your build and will help you get a good design and a water tight contract and bid process. The less ambiguity up front and in the contract the better. Ambiguity leads to disagreement which leads to delays and cost blowouts.
I had no idea it would be so complex so it makes budgeting difficult. And, to that end, make sure you have big buffers! Unless you've done a lot of these before there will be things you haven't allowed for. My Section 96 contributions to local council alone were $40K. Then I had to spend another $50K on site contamination and probably went $50-$80K over in interest servicing due to the extedned build duration. Its not cheap, but I've still made a nice little margin and am very happy with the end product. I'll be happier still when the end product is actually ended...
Cheers,
Michael
Yes, its been good posting on here and getting some of this off my chest. The support on SS has been great.
Matto, I must admit that I personally selected this builder as I had a previous relationship with them. Would you believe I met them through Somersoft!
In future, I'd argue keep personal and professional relationships completely separate. I thought I could trust this builder so wasn't as rigorous as I should have been in my initial research of them or in getting a water tight contract. My contract is strong, but it could have been stronger. I never even saught a prior client meeting or reference check and relied only on a site visit of an existing client while they weren't there. The build quality was good, but I have no idea how long it had been going or how much over budget that reference build was.Use third party professionals like your architect to assist with tender and builder selection.
Its not as complex as it sounds, and you learn a lot by just doing the process. Your architect will get you started on the right track and walk you through the approval and construction process and all the third parties you need to engage. Make sure you don't skimp on your early professionals. They are the backbone of your build and will help you get a good design and a water tight contract and bid process. The less ambiguity up front and in the contract the better. Ambiguity leads to disagreement which leads to delays and cost blowouts.
I had no idea it would be so complex so it makes budgeting difficult. And, to that end, make sure you have big buffers! Unless you've done a lot of these before there will be things you haven't allowed for. My Section 96 contributions to local council alone were $40K. Then I had to spend another $50K on site contamination and probably went $50-$80K over in interest servicing due to the extedned build duration. Its not cheap, but I've still made a nice little margin and am very happy with the end product. I'll be happier still when the end product is actually ended...
Cheers,
Michael
Hi Everyone,
Just a quick Friday afternoon update on how things are progressing...
We're finally coming down to the wire. Just the usual last minute overuns that I expected from this builder. They'll also want to fight about the last milestone payment no doubt, but that's for next week. I'm going to issue them an Order to Complete today so we force a completion date. Its as good as done so they should come to the party.
On the upside, we just had our future Property Managers through to do a rental appraisal and they were very impressed with the quality of the development and the level of finish we have achieved. All of the rental assessments beat our expectations so the yield will be much stronger than initially thought.
Here's the rental assessments:
Unit 1: $850-$890pw (2bed+study, 2 bath, 2 security carspaces)
Unit 2: $920-$950pw (3bed+study, 2 bath, 2 security carspaces)
Unit 3: $900-$920pw (3bed, 2 bath, 2 security carspaces)
I asked them how quickly they could let them and they said in the last fortnight they had 7 new properties added to their letting portfolio and all 7 let at the first open in the range they indicated. So I think they're the real deal. Won't know for sure until they're let, but its a good sign. Very professional ladies on the Northern Beaches.
At $900pw average the whole thing would be CF+ at completion and actually cover our non-deductible debt on our land in Bardon too. Looking forward to that day. Not long now. Those yields should really help my valuations too.
In fact, once I know when the Opens will be I'll post them here in this thread for anyone interested in coming by for a sticky beak. I'll try and fly down for them too and have a Somersoft Q&A with nibbles after the Opens for those interested in sticking around.
Cheers,
Michael
Just a quick Friday afternoon update on how things are progressing...
We're finally coming down to the wire. Just the usual last minute overuns that I expected from this builder. They'll also want to fight about the last milestone payment no doubt, but that's for next week. I'm going to issue them an Order to Complete today so we force a completion date. Its as good as done so they should come to the party.
On the upside, we just had our future Property Managers through to do a rental appraisal and they were very impressed with the quality of the development and the level of finish we have achieved. All of the rental assessments beat our expectations so the yield will be much stronger than initially thought.
Here's the rental assessments:
Unit 1: $850-$890pw (2bed+study, 2 bath, 2 security carspaces)
Unit 2: $920-$950pw (3bed+study, 2 bath, 2 security carspaces)
Unit 3: $900-$920pw (3bed, 2 bath, 2 security carspaces)
I asked them how quickly they could let them and they said in the last fortnight they had 7 new properties added to their letting portfolio and all 7 let at the first open in the range they indicated. So I think they're the real deal. Won't know for sure until they're let, but its a good sign. Very professional ladies on the Northern Beaches.
At $900pw average the whole thing would be CF+ at completion and actually cover our non-deductible debt on our land in Bardon too. Looking forward to that day. Not long now. Those yields should really help my valuations too.
In fact, once I know when the Opens will be I'll post them here in this thread for anyone interested in coming by for a sticky beak. I'll try and fly down for them too and have a Somersoft Q&A with nibbles after the Opens for those interested in sticking around.
Cheers,
Michael
Congratulations, Michael.
What a great outcome. You certainly deserve it and your perseverance has paid off.
Enjoy the cashflow.
Regards Jason.
Great Outcome Michael and I note the CF+ aspect but can how are you treating the interest paid so far. I know you have aCompany so have you simply capitalised that debt into the entire loan? IF so, then a CF+ outcome is very very very good.
Regards Peter
Hi Peter,
No, under my structure, all the property loans are actually loans to purchase units in the trust so the interest is deductible against my income. They haven't been capitalised into the development cost.
But there's carried over losses so for the next 18 months I'm likely still to be paying zero percent tax.
Even when those carried over losses are exhausted, the depreciation on the new development will help limit the profits the company makes and thereby the amount of profit it needs to distribute to me annually.If I add back my tax deductions from the structure its circa $50K pa CF+.
All looking really good. Just need to get it finished in the next week or two then hand over to our PMs to get tennants in.
Here's a couple of happy snaps from the PMs when they did their appraisal.
Cheers,
Michael
Attachments
Forget the reflection what about the crate
So are we meeting up at the property?
Cheers
That's modern minimalist style furniture.
Hi Guys!!
Yes Andreas, I do intend to have an open where everyone on Somsersoft is invited to stay back and share a beer and listen to me dribble on about the development.
As soon as we get through the next two weeks I'll arrange a date and post it here.
And, yes, those happy snaps aren't so flash. But they were just for us and not meant for marketing. As soon as I award the PM contract they'll take some professional snaps to list it for rent.
In fact, I think I'm awarding it to another company other than the one that took those snaps.
Anyone had any dealings with Bennet Property Management? They look like a sharp operation on their website and in their dealings with us to date they've been great.
Oh, and API Magazine want to run the story in their March edition next year. Should be fun.
Cheers,
Michael
Yes Andreas, I do intend to have an open where everyone on Somsersoft is invited to stay back and share a beer and listen to me dribble on about the development.
As soon as we get through the next two weeks I'll arrange a date and post it here.
And, yes, those happy snaps aren't so flash. But they were just for us and not meant for marketing. As soon as I award the PM contract they'll take some professional snaps to list it for rent.
In fact, I think I'm awarding it to another company other than the one that took those snaps.
Anyone had any dealings with Bennet Property Management? They look like a sharp operation on their website and in their dealings with us to date they've been great.
Oh, and API Magazine want to run the story in their March edition next year. Should be fun.
Cheers,
Michael
Fame as well as fortune?
