Property Development Project Management Fees

Hi Forum,

I am considering using a property development project manager to take care of all aspects of a property development project.

The duties that they will be responsible for are:

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-Find property that can be developed in the right areas. Often this property is not listed on the open market and can already be DA and/or CC approved.

-Continually research, assess industry data and report on the progress in towns and suburbs we develop in.

-Conduct thorough checks with council, surveyors and local service authorities once a suitable property has been located.
-Liaise between local agents, clients, solicitor and financier to optimise purchase terms and ensure a smooth process.

-Research with councils and work with local architects, designers, engineers, builders and contractors to find the best development solutions for this specific property.

-Run various analyses and project feasibility.

-Work on the design with the architect and builder and ensure clients are happy with the final plans before they are lodged with council.

-Raise builders estimates then once a builder is appointed obtain tender and contract at appropriate times.

-Negotiate builder and contractor discounts.

-Produce and keep a detailed budget throughout the project and present the budget to clients, their accountant and quantity surveyor to optimise tax benefits.

-Work with client to choose personal colour and design schemes, or manage this on behalf of clients.

-Oversee the sometimes complex DA and CC process.

-Manage the building process and take photographic records of each stage.

-Weekly Update Reports containing photos of the development's progress are completed and emailed every Friday.

-Keep a timeline of progress of the development and present to client on completion.

-Brief local real estate agents, negotiate management terms and assist in finding suitable tenants.

-Fast track completion and occupation certificate process.

-Brief quantity surveyor and raise depreciation schedules on completion.

-On-going checks to ensure property is being managed correctly.

-Keep you in the loop of ongoing, future potential investment opportunities to help you with your ongoing wealth creation programme.

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What do you think should be a reasonable fee to manage all aspects of the development?

Any opinions or experience would be appreciated.

Thanks
Jason
 
You are asking for a lot.

Finding the site will cost you at least $5-10k which is what a good BA will charge.

I have Complete Development Solutions doing all the planning and construction work for a project of mine. Don't have the exact numbers on hand but their fees are built into the over all project cost and from memory don't exceed $20k.

Most of what you want can be done by an architect who often charge you a small % of the project cost. Not cheap but they provide good value.
 
Wow, that is a huge brief for a project manager.
I guess you could employ companies that cover all these items and you will be charged a fee for each aspect required accordingly, ie BA, Builder, Draftee etc.
 
It looks to me like a cut and paste from a company brief.

On the BA side of things they usually charge a % of the purchase cost. I think I paid about $12k.

The on the project mgt side, again, it was % based, and added from memory about 2-3% to the cost.
It was a complete package (similar to what you are looking at).

knowing what I know now I would do some things differently. One of the payment stages was on "contract signing" - however, the contract never proceeded as I couldn't get finance for the project initially - but still had to fork out this amount.

A good builder will often do a lot of this for you anyway - included in the contract cost. However, finding the right builder can be a challenge if this is your first development.

You need to consider if you want the full package - whereby they do everything for you - or do you want someone who will help point you in the right direction.

Its not a cheap service, and comes with no guarantees of success. Any decisions on the project need to be made by you.

Blacky
 
Yes someone has offered this service to me. They want $16,500 up front before starting and then will take 35% of the final valuation profit minus costs (not including interest costs though, just land and build). The $16,500 will be included as part of the 35% and the difference payable.

Do you think this is good value or not?

This is my first development and they are willing to explain the whole process to me as they completely manage the project, that way next time I could possibly do it on my own.

Is it too expensive and should I just deal with an architect and builder instead?

Thanks for all your suggestions and input, very much appreciated.

Thanks
Jason
 
Yes someone has offered this service to me. They want $16,500 up front before starting and then will take 35% of the final valuation profit minus costs (not including interest costs though, just land and build). The $16,500 will be included as part of the 35% and the difference payable.

Do you think this is good value or not?

This is my first development and they are willing to explain the whole process to me as they completely manage the project, that way next time I could possibly do it on my own.

Is it too expensive and should I just deal with an architect and builder instead?

Thanks for all your suggestions and input, very much appreciated.

Thanks
Jason

Wow I am sooooo underselling my skills!

Personally I would pay the upfront fee then perhaps negotiate an hourly fee and assess as you go if you are getting value for money.

It's hard to say - that 35% might only end up being $1 or $20,000. Totally depends on the project.
 
I am currently looking to a project manager to oversee a development. However, we purchased the block ourselves.

Some of the items you have mentioned in your brief will possibly unnecessary.
Personally I would use a BA to find the block/land.
Engage a town planner yourself using recommendations who will recommend/engage architect and perhaps keep this part off the brief for the P.Mgr. The town planner and architect assess best use of land and build suitable and engage with you continuously to reach a complete appropriate design for DA, obviously far more detailed spec need by draftsman/various engineers for BA.

The town planner will likely sort noise report/storm water mgt etc to lodge with DA. And liases with architect throughout this process.
At this point you could then look to a P. Mgr. To sort the various engineers, (civil, electrical, fire, structural etc draftsman/architect q.s. Building certifier etc

You could consider using the p.Mgr up to BA only as builders tend to oversee all works from this point. The bank (depending on the size of the build), will arrange their own q.s. For assessment for drawdowns.

Though you tend need planned sealing/titling done at the end of the build. Probably not too hard to research and sort yourself.
P.mgrs in Brissy so far in my quotes, charge % of build costs, one has quoted an almost capped figure, one a % and one up to BA. Additional hourly rates have been quoted at 150-250 pr hr + gst.

However, this is for a multi unit so is more detailed. It depends on your build size!
 
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So you are basically just wanting to invest you money but don't have any expirence in the field so therefore want to pay someone to do all that work for you?

You probably could find someone to do that but would likely charge big $$$. As mentioned probably an upfront fee and a % of profit margin...

Have you thought about doing a joint venture with someone? Someone that has done one before with some expirence to help you?

That's what I would be looking to do...
 
Hi Mitch1,

What you are describing is part of the role of a development manager - generally employed by the medium to large developers. They typically receive around $120K-$160K pa however juniors would receive less and seniors would receive more. If you can figure out how much time you expect that the person would be putting into your project, then you could just work it out based on what the equivalent wage would be plus costs associated with the business profile. Its not as important the amount you pay, but rather what you get for that money - Paying someone $50,000 who is qualified and experienced with a comparable track record would yield a greater return than paying someone $10,000 who has no qualifications and hasn't the slightest experience in your capital market requirements.

Cheers.

Brendan
 
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