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There can often be some misunderstanding around a fixed-price contract.  If you don’t know a builder, then there can also be a little mistrust as you look over the tender. Am I being overcharged?  Is everything included?  Will there be many variations?

Today I opened an email that made me smile and really feel grateful for such a wonderful builder we are working with on our development projects.

The email came from the office of my builder. It related to a three-villa project under construction. It had two variations attached to it; one for the site preparation and the other for slab piering.  I’d been overseeing the works with the site manager so I was expecting the variations but weren’t sure on the exact cost they’d come in at.

“Variations are changes to the original contracted work, which involve either an addition or reduction in the scope or value of work,” so the <a href="https://consumer.masterbuilders.asn.au/the-building-process/contracts-and-variations/variations">Master Builders Assoc describes</a>.

So you’ll always find some items marked as provisional in your builder’s contract, because you can’t always plan the entire “scope or value of work” required when developing.

In this builder’s contract this clause was clearly included:  “Provisional sum is the estimate cost of labour and materials; it includes an amount for the builder’s margin. If the cost is more than the allowance, the difference including builder’s margin will be added to the contract price. “

Back to our three-villa project variations.  The first one covering the site preparation was for tree removal.  The builder’s tender covered vegetation clearing but from the time Property Bloom located the site, ran our analysis, designed the project, lodged the development approval and construction certificate and the client had her construction loan finalised and we could start to build, the vegetation had grown to a rather large tree.  We did get a quote from a tree lopper to clear it, but we decided that it would be cheaper for the builder’s excavator to push it over and clear it as part of the site preparation. So we did expect a little increase to this provisional cost but wouldn’t know until the excavator submitted his invoice to the builder. It ended up being a little over $1,000 for this work.

The other variation was for under slab piering.  Once work was completed, we knew that we hadn’t needed to use the entire provisional allowance in the builder’s tender.  When on site with the concreter, I could see that the depths he was drilling to were not as deep as expected and so there were less lineal meters of piering required.  For this work our client was receiving a credit as the provisional allowance was over-estimated.

I needed to let my client know that there had been some variation to the build cost.  After all, she had signed a fixed-price contract a few weeks earlier, but I had made a point to explain the items marked provisional in her contract.  Usually provisional items are:

<ul>
<li>Disposal of stormwater – even with an engineer’s plan, this may vary during construction</li>
	<li>Retaining walls – the square meters of retaining often can’t be totally confirmed until the site is cut</li>
	<li>Piering to under the slab – dependant on how deep they may need to drill to hit solid support</li>
	<li>Site preparation – excavation – cut and fill.  There can be more fill required to bring in or take away</li>
</ul>
The conversation I had with my client was easy. She was coming out in front with the credit on the piering more than covering the variation on the site clearing.  This is the kind of outcome we strive for, but it doesn’t always work that way.

In property developing or home building, there can often be a degree of disappointment once under construction as issues arise.  Mostly this comes down to the developer or home owner’s expectation that the costs won’t change.

The more developments or home builds you manage, the more issues you become aware of. But if you can go into it knowing there is a degree of risk that you must take, then you won’t be disappointed if an issue does come up.

No one can really know what will happen once you start work, but as project managers, it’s our job to manage the issues in the most effective way so that we minimise costs and the valuable time in may take to sort out the issue.  And when it goes the other way and a credit is issued, then that’s a wonderful feeling.

<h2>Recently listed properties:</h2>

[smartcode_project:default project_id=3490]

[smartcode_project:default project_id=3783]

[smartcode_project:default project_id=3565]
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jochivers-wq5Bp59R5a

Why the cost can change, even in a fixed-price building contract

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This week I went to an eye specialist. I’ve decided it was time to consider laser surgery as I’m short-sighted and need glasses for driving and now I also need glasses to read (yes, I know, a sign of ageing!).  I spent about an hour peering into various machines while my eyes were scanned, measured and flashed at.  At one point I thought I was in a disco with strobe lighting, but unfortunately no John Travolta materialised.

Afterwards the specialist reviewed the enlarged computer images taken of my eyes; I asked him if the measurements were showing the contours of my eyes. He looked at me and said yes and was a little curious to know how I knew this, apparently not many people ask.  I told him I was a property developer and it reminded me of the contour survey that we need before we start developing our sites (pardon the pun... get it sight / site?!).

So eyes and land both need surveying before any work can be done. It makes sense, really.  The surgeon needs detail such as the height of my cornea, and the builder needs to know the fall of the land.

[smartcode_project:default project_id=27783]

This made me reflect on how important it is to understand the contours of land. I find that many of our clients do not understand what a contour survey is and why it’s necessary, so I thought I’d focus on this today.

In the property world, a contour is an outline of a mass of land. A contour or detailed survey is done by a surveyor and required before you can start on the design of your buildings. Contour lines will be marked on the survey.  Below are some tips* that can help explain the marking you’ll see:

<ul>
<li>All points on a contour line are of the same elevation.</li>
	<li>No two contour lines can meet or cross each other except in the rare case of an overhanging vertical cliff or wall</li>
	<li>Closely spaced contour lines indicate steep slope</li>
	<li>Widely spaced contour lines indicate gentle slope</li>
	<li>Equally spaced contour lines indicate uniform slope</li>
	<li>Closed contour lines with higher elevation towards the centre indicate hills</li>
	<li>Closed contour lines with reducing levels towards the centre indicate pond or other depression.</li>
	<li>All contour lines must close either within the map boundary or outside.</li>
</ul>
*Reference: engineeringcivil.com and Ramasesh Iyer 

Once the architect or draftsperson has a contour survey then they can begin work on the plans, and the survey will indicate how much site works may be required.  For example, a sloping site will need to be levelled if you are using a slab construction and therefore the approximate height of retaining walls and volume of spoil to be removed need to be calculated.  These costs need to be allowed for by the builder and he depends on the measurements on the contour survey for this data.

[smartcode_project:default project_id=7633]

<hr class="system-pagebreak">
 

Click to enlarge

<a href="/images/stories/2012/10/survey.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2012/10/surveythumb.gif"></a>

On this survey above, if you look at the first number on the top right-hand side of the survey it reads 1.06.0 then the next number down reads 105.5, this tells us there is a half metre fall from the rear boundary to this contour line. The surveyor has used 500mm intervals to the next contour line.  The last measurement at the front boundary reads 99.0.  So this tells me the site has about a seven-metre fall, so it’s a steep site. The interesting thing showing on this survey is the area in the middle of the survey where there is a break in contour lines. The surveyor has marked the survey with broken lines to indicate a change in grade. Why would this be?

I can tell you why. There was an old house built right in the middle but it had been demolished, so this part of the land had been levelled. This site, while steep, was purchased for a pier, bearers and joist style project, and the view from the top of the site is spectacular out over the valley. So it’s certainly not an ideal development site, but we made it work nicely as a dual-occupancy project.

[smartcode_project:default project_id=8082]

Accuracy of a survey is extremely important. On one site we found the surveyor (not mine, as this was a development application-approved site purchased) had taken a measurement from one metre in from the rear boundary instead of right on the rear boundary. This was not picked up until after site preparations started and the site was cut. As the site sloped from rear to front, the retaining required on this rear boundary was much more than the builder had allowed for based on the plans. So it is important if you are buying DA-approved sites, to have your own surveyor double-check the plans and proposed levels that are based on the original contour survey.

I’ll keep you updated on whether I have my sight fixed but in the meantime, set your sights on the contour survey before you start developing property.

Jo Chivers is director of <a href="https://www.propertybloom.com.au/">Property Bloom</a>, which manages property development.
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What you need to know about contours on a property development site

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Property development can be daunting so I’ve put together some FAQs to help address some of the important questions that will arise as you start your development.

This has been broken down to a three-part series:

<ol>
<li><a href="https://www.propertyobserver.com.au/https://www.propertyobserver.com.au/developments/how-to-get-started-in-property-development-jo-chivers/2012061355113" target="_blank">Getting started </a></li>
	<li><a href="https://www.propertyobserver.com.au/https://www.propertyobserver.com.au/land/mastering-the-design-planning-and-approval-stage-of-a-property-development-jo-chivers/2012062055209" target="_blank">Design, planning and approvals (as seen last Thursday)</a></li>
	<li>Construction Time</li>
</ol>
 

2. Construction Time 

“Each of us is carving a stone, erecting a column, or cutting a piece of stained glass in the construction of something much bigger than ourselves.” Adrienne Clarkson

Construction time is the best part of developing property. Seeing that first sod turned and standing back as the excavator starts to form up your site is truly satisfying.  The groundbreaking, also known as cutting the site, marks a massive milestone in your development project. 

[smartcode_project:default project_id=22803]

There is so much work that needs to be completed before getting to this stage.  You’ve found a site, negotiated to purchase it, researched with the council and other authorities, run your feasibility, got your designs done, had your building quotes completed, prepared documentation and lodged your development application, perhaps battled with the council.  Then you’ve obtained your consent and engineering and construction certificate (CC) plans and the CC consent.  Once fully approved there are still more hoops to jump through and it’s off to your lender to get your finance organised and finally unconditional approval. 

The development process is like an iceberg.  Most of the work required in project managing your property development is done before you cut the site.  It’s all hidden below the surface.

[smartcode_project:default project_id=32227]

So by the time your project comes out of the ground, you have done most of the work.   Inexperienced developers won’t understand this, but I know the sheer volume of hours required to get a project to the construction phase is phenomenal. 

When can I start construction? 

As soon as you have your DA – development application and CC – construction certificate –  consents and you have obtained an unconditional finance approval, your builder can start construction. 

What is the first process?

[smartcode_project:default project_id=94611]

Site clearing is required before you can start preparing your slab or footings. So ensure your builder has included vegetation and tree removal.  If you are demolishing an old house or building then ensure this is done before your builder is ready to start, as you do not want to hold up the process. 

How should I manage my builder? 

It’s important to have open communication with your builder from the start. Explain to him that you want to be involved and depending on your experience and time available let him know if you will be project managing the development or engaging a project manager. 

As project managers, we are in constant communication with our builder’s site or construction managers. 

[smartcode_project:default project_id=29921]

What does a project manager do and do I need one? 

A project manager can help you to fast track your development. A good project manager will: 

<ul>
<li>Save you money</li>
	<li>Save you time</li>
	<li>Minimize your risk</li>
	<li>Teach you how to manage your development</li>
	<li>Give you access to sites not on open market</li>
	<li>Professionally manage, record and report the process for you</li>
	<li>Share their local knowledge, experience, contacts, suppliers</li>
	<li>Allow you to keep your day job</li>
	<li>You can learn the process then perhaps feel more confident to manage our next project. </li>
</ul>
You could use a project manager if you are inexperienced or time poor or both. It’s a good idea to use a project manager if you want to learn the process of developing, you can have your hand held through the development and will be amazed by what you will learn by being guided through the process. 

[smartcode_project:default project_id=22699]

Main steps in the construction phase include (for typical slab &amp; brick construction):

<ol>
<li>
Site preparation This involves clearing of the site and pegging out of the site by the surveyor. Sometimes retaining walls will also be built at this stage if required.</li>
	<li>
Slab The plumber will need to lay plumbing that will be located beneath the slab of the development. This needs to be done before the slab can be formed up.  The slab piering is then completed as per the engineer’s specifications and plans and then the slab can be poured.  It’s very exciting to see the slabs go down.</li>
	<li>
Frames and roof trusses The frames are generally prepared before being delivered to site and can be erected very quickly with a day or so. It’s great to walk around the site once the frames are up and get a feel for each room.</li>
	<li>
Roof tiling of metal roofing Some builders prefer to complete the roof before starting the brickwork and other builders work the other way around. I’ve found predominately builders want to get the roof on as quickly as possible to protect the frames.</li>
	<li>
Brick work This stage really gives the development true structure, and you can feel the development making good progress when you see the brickwork completed.</li>
	<li>
Rough ins This involves the electrical and plumbing wiring and pipes to be installed before the internal linings to the frames.</li>
	<li>
Internal linings After the rough in is complete, the insulation will be installed into the wall and ceilings and then the plaster will start on lining the walls and ceilings. You really get a good sense of space within the dwellings at this stage.</li>
	<li>
Waterproofing and tiling The wet areas will be water-proofed in preparation for the tilers to start work, generally after or even during the timber mould out.</li>
	<li>
Timber mould out This stage involves the carpenters installing the skirting boards, architraves, door jams and doors and kitchens.</li>
	<li>
Lock up is when all external doors including garage doors are on.</li>
	<li>
P.C.  fit out. P.C. is a term for a prime cost item and includes tapware, bath, mirror, vanities and other accessories, which are installed at this stage.</li>
	<li>
Practical completion. This is the point in time when an inspection is conducted when builder is almost finished. You will walk through the development with the site manager and point out any items that still need attention. By this time it should only be touch ups and minor items requiring installation.</li>
	<li>
Handover This is when you are happy the construction has been completed to your satisfaction and to the plans and after paying the builder’s final invoice, keys will be handed over to you. </li>
</ol>
When can I lease out or sell my development?

Once handover is completed and you have received the occupation certificates from the council or your private certifier, you can lease the dwellings out.  If you are building more than one dwelling then you may also be subdividing, so you cannot sell the individual dwellings before you have subdivision approval. They may be sold subject to approval or registration of the subdivision. 

[smartcode_project:default project_id=7633]

Seeing your development emerge from the dust and dirt and slowly take shape until it resembles exactly what you have planned is one of the most exciting and satisfying moments you could experience as a property developer.

As I see Property Bloom projects come to completion, it really makes me feel like we’ve achieved an amazing thing for our clients; manufactured equity, provided education, created strong yields and most of all helped them fast-track their portfolios and plan for their future.  It is such a wonderful feeling to step back and look at what’s been created and understand the needs that have been met for our clients and for the local communities we develop in. Seeing the dwellings tenanted or sold and lived in by families that will get to enjoy the fruits of your labour is what it’s all about.

Jo Chivers is director of <a href="https://www.propertybloom.com.au/" target="_blank" title="Property Bloom">Property Bloom</a>, which manages property development.
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The 13 steps in the construction phase of building a new home

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If you had seven hundred and eighty two odd thousand dollars, or the median price of Sydney to spend, how would you spend it?
I was reading an article recently about finding a suitable property in Sydney and paying just the median price, which was around $782,000 at the time.
The story continued as property experts put forward their ideas. One suggested a small house in outlying Sydney suburbs like Rockdale, but most properties in this price range would be on busy roads and that would be the compromise.
Another expert recommended inner ring apartments over old terraces or townhouses that would need substantial renovations. He said you could pick up a one bedder for $600,000 to $700,000, or a two bedder for $775,000 to $900,000, with expected yields around 4.5%.
Reading about this expensive Sydney property mentioned in the story got me thinking about what you could buy for the same price if you drove two hours north of Sydney to the Lower Hunter Region of NSW. Depending on which city you chose, your $782,000 would stretch to an impressive acreage or farm. 
In the city of Cessnock you could buy three houses, each for $260,000 (around this city’s median price). They would be on large 800 square metre blocks with 3 bedrooms and each rent for around $300 per week delivering a 6% or more gross yield. Or you could buy two larger, newer homes or a really beautiful house within a golf resort and even a commercial property.
In the city of Maitland you could buy a luxury restored heritage home built at the turn of the century with manicured gardens, a 6 bedroom homestead on acreage, or two substantial, almost new houses in new land estates each on 750 square metres of land.
Or you could develop land and build a dual occupancy – for around $782,000, your budget would cover building two four bedroom homes on a larger corner block with a Torrens Title subdivision.
The big difference between buying multiple or larger properties with your budget compared to building two dwellings yourself would be the equity creation and depreciation benefits. You see if you used your $782,000 to add value, you would create about $120,000 in equity within a year and get around $25,000 in depreciation in year one (using the diminishing method).
I know what I’d chose if I had a lazy $782,000 to spend particularly if I was an investor...hmm a two bedroom unit in Sydney or a four bedroom dual occupancy project in the fast growing city of Maitland? 
Oh, and another very important thing to note. The Hunter was a big winner in the New South Wales budget. This week it was announced that the <a href="https://www.hunterinfrastructure.nsw.gov.au/" target="_blank">Hunter Region gets $100 million to top up the Hunter Infrastructure Fund</a>.
Plus more than $300 million had already been announced for Hunter projects ahead of the budget including $280 million for the last link of the Newcastle inner-city bypass, $20 million to rebuild the Hunter Sports High School, $6 million allocated towards the Glendale interchange and $3 million for the planning of a new Maitland Hospital, among many others.
Infrastructure spend is one of the key indicators that an area is earmarked for growth.
<a href="https://www.propertybloom.com.au/">www.propertybloom.com.au</a>
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What would you buy with Sydney's median price?

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You know it wasn't that long ago that we lived in a totally different world. We had jobs for life. If you started work after leaving school in a bank, then you worked for a bank for the next thirty years or so. It was the same as buying a house and living in it for the same thirty years or so. That one house was deemed your 'investment for life' as superannuation was not yet invented.  
Also about 30 years ago, a little thing called the internet was introduced to us, we were told we could 'surf' the World Wide Web, little did we understand at the time the absolute massive impact this would have on the way we'd  live in the future.  
 I have trouble explaining to my kids that there was no internet when we were kids! The internet has now become an historical era; we talk pre and post internet. The internet opened up everything and now anyone, no matter what age can start a new business or become an 'entrepreneur'. So the 30 year careers in one industry have become extinct. 
A survey I read recently reported that 41% of all new business start ups in Australia are launched by people aged between 30 and 39, 21% aged 25 to 29 BUT 16% are aged between 40 and 44. I have a client starting her new business at the age of 58. Anything is possible. 
Today I received a call from a fifty something man who had made his fortune in buying, building up and selling businesses and now he was ready to park his money in property using a Self Managed Super Fund. He said "Jo, I'm ready now to kick back a bit and let my investments do the work for me." He is looking at a Property Bloom development that he'll fund from his SMSF that will create a nice chunk of equity during the development process and then result in a strong  yielding investment for him. 
The age for first time property investors is reducing. Whilst one in five Australians own an investment property, the number of Generation Y’s, individuals born roughly between 1982 and 1994, who own multiple properties is now on par with the Baby Boomers (17% own 2 or more). My step daughter fits this description with three properties under her belt.  Our youngest client will have six investment properties once we complete the two developments we have underway for him. His strategy is to build his portfolio as quickly as possible then as he starts a family, pull back and let time and capital growth work for him. The Gen Ys I know are clever. They embraces the internet early and used it as a tool to research and educate themselves on property investing. 
We live in a world overflowing with information and as older people realise that perhaps their 30 year career and original home is not going to deliver the retirement income they'll need over the next 30 years - because yes we are also living longer - then it's never too late to start investing and looking at entrepreneurial opportunities. Don't let physiological hang ups about 'comfort zones' set years ago hold you back. 
It's exciting times and why not build your own dream now? 
Jo Chivers is Chief Executive Officer of property development project managers <a href="https://www.propertybloom.com.au/about" target="_blank">Property Bloom</a>.
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Never too old to own your future: Jo Chivers

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One of the most common questions I am asked these days comes from investors looking to use their self-managed super funds (SMSF) to invest and develop property.
It's no surprise that people who've had good experience with property investing want to apply the same strategy and take control of their superannuation investments.  But it's not as easy as it seems and you need to be clear on what tactics are permissible when investing money from your SMSF. You also need good, qualified advice.
I have to say I find it a little hard to stay on top of what you can and can't do with a SMSF.
When we recently started working with our new client Adam Mondy of <a href="https://www.mondyfinancial.com.au/" target="_blank">Mondy Financial Services</a>. I was delighted to hear that he was a financial planner who specialises in SMSFs. So I asked Adam if he wouldn't mind setting us straight on what we can and can't do with a SMSF.
Below are Adam's words of wisdom:
THE SMSF Developments
It sounds like a new movie release, but the SMSF world can be just as exciting and just as scary.
The Australian Tax Office are suggesting that 30,000 new SMSFs are opening each year, which is a lot of people wanting to be in complete control (or at least have the perception of control) over their retirement fortunes.
Investments in a SMSF
Any investment you can make in your current super fund or personal name you can make in an SMSF. Although if you are looking to boost your collection of fine wines and buy a few bottles of Grange Hermitage or perhaps add to your art collection with a Pro Hart, then that's a topic for a another time. Whilst it can be none, it's far more complicated.
You can invest in shares, term deposits, bonds, real estate trusts but a major drawcard and what has become very popular, is property.
Borrowing to Buy Property in your SMSF
The fact that you can take your super, borrow some funds from a bank and then buy a property that you may pay off in 15 - 20 years (yes slightly different than your traditional property strategy) using some or all of your superannuation guarantee payments, is a powerful strategy. Not a perfect, well diversified, sure fire guaranteed strategy, but nevertheless a powerful one based on past property prices. Basically if you are comfortable with gearing (using somebody else’s money, at a cost, to help build your future funds) using SMSF may suit you.
The standard method is to obtain a special loan from a normal banking institution, combining these funds and you can purchase any type of property. The ATO has very strict rules on “whom” you can purchase from and “who” can use these properties but any property type is fine.
The interesting thing about these loans is you cannot change the fundamental character of the property while the loan is on foot. For example, land cannot be purchased and then developed while a loan is attached. You could purchase a house and land package or an “off the plan unit” but there could be no ownership transfer under the package until the home/unit build was completed. The fundamental change being from vacant land to residential property.
On the other hand it is possible to make improvements to property, whilst the loan is on foot, so long as:
a) The improvements are not so extensive that they result in a change of the fundamental character of the property. Renovations to an existing residential property would generally be acceptable;
b) The improvements are not funded from borrowed monies, In other words the fund uses its own funds to make improvements to the property.
Can you develop property in a SMSF?
Many people think that you cannot develop in the SMSF environment. This is not correct. You can set up special trusts within the SMSF environment that allow you to use borrowed (by the SMSF) funds, develop property, subdivide, buy/sell, build a granny flat, or any property strategy you can think of. These trusts will even allow other investors, other SMSFs or you personally to invest with your SMSF to undertake a development.
The major catch, other than it is highly regulated, complicated and can be costly, is that you need to have the funds outside of the specific property you are developing. You cannot borrow against the property you are developing, as would be the “norm” in a traditional development. If you have access to funds, are able to borrow against other assets and/or have other parties involved, this scenario may be beneficial.
Using your own funds i.e. not borrowing
Basically you can do what you like with your own super funds in relation to property when borrowing is not undertaken. As long as the ATO rules of purchasing and “use” of the property are satisfied then any purchase, development, construction, subdivision or investment can be undertaken.
Your future self?
Whilst using your SMSF to invest in property has become common, you should consider that property is illiquid and may not produce the returns it has in the past. So it's important to do your due diligence carefully. In addition to this many property investors are committed to property over other investments, meaning there is little diversification across their portfolio. However, using different strategies such property development where you are adding value and creating equity through the process, can be a good way of building up the value of your SMSF faster than waiting on capital growth.
With any investment the return you receive should attempt to reflect the potential risk you are undertaking. Don’t forget in this instance we are talking about your future retirement funds, so you not only need to justify this strategy to your advisers, to your auditor and to the ATO but most importantly to your future self and family, so tread carefully.
<a href="https://www.propertybloom.com.au" target="_blank">www.propertybloom.com.au</a>
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Can I develop property using my SMSF? Jo Chivers

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I was lucky to recently spend an amazing weekend riding horses in the NSW Snowy Mountains National Park.
It was one of those bucket list trips and I went with an old school friend. We'd gone to pony club together and grown up as horse crazy girls. We'd spend most of our teenage years riding and looking after our horses (which kept us out of trouble!).
Whilst sitting around the camp fire at night with a group of other women and staff we'd just met, I was discussing property investing with one of the ladies – can't help myself!
She was a pretty amazing single lady with her sights set on the future. She'd been clever enough to buy a few investment properties in-between serving our country in the army.  We were discussing her recent purchase of an off the plan apartment.
She shared with me the numbers on her deal and I was a bit surprised. I have good experience with buying off the plan but it was over ten years ago now that I used this strategy. Back then, the property developer offered a good discount to purchasers and this helped create some equity. If the market was also moving upwards, then a nice chunk of money could be made by settlement time. I would settle an apartment then draw out the equity to use as a deposit to settle the next one.
But things have changed. There seems to be more risk as there isn't the same discounts being applied. So you buy in at today's market price. If, of course, it's a hot market, as Sydney is at the moment, that price could end up more than what the apartment may be worth in a year or two once completed.
I explained what I did to the lady. Property Bloom manages small developments for our clients. A dual occupancy development can create a big chunk of money within twelve months and you end up with two properties.  I explained that the big difference between buying off the plan and developing yourself, is that you are creating the equity through the development process, not hoping for capital growth whilst your apartment is being constructed.
Would you rather control of the equity creation by cutting some keen deals on the land and construction or rely on a stranger to build your investment and hope for the market to rise?
I did the latter six times and was lucky four out of the six times. The other two deals were borderline. If I had my time again, I would not have completed on the two ordinary investments.  But as they say, time heals all wounds and because I held onto these investments (in lieu of selling at a loss) they've turned out well.
My big lesson from buying off the plan?  It is far more lucrative to be the developer than the investor.
<a href="https://www.propertybloom.com.au">www.propertybloom.com.au</a>
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Chewing the fat on off the plan investments

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We are moving away from 9-5 and Monday to Friday work to a "work when, where and how is appropriate model" according to Morris Miselowski of Business Futurist.
In this new world, he says many of us will have 6 careers and 14 jobs, work into our 80's and have a "work portfolio" rather than a "job".
The work portfolio means we can gain income from a range of activities as well as mix in a more cash flow stable 'salary' job. 
I totally agree with the idea of a work portfolio. Technology gives us the freedom to work anywhere, at any time. You no longer have to be tied to a desk working for one business to earn your money. 
In fact, you could be working several jobs at once to meet your needs. For instance, you may want to sell on the global market those unique items you make on Etsy, manage your various property investments and superannuation fund, do the odd task for money and also perhaps hold down a 2-3 day a week salary job.  
It's the hay day for entrepreneurs as crowd funding has become the norm and new businesses can be "incubated". This means being nurtured and supported in free office space with access to all the services required to get started on your new business journey. Wow, I wish this was around when I started out! 
File sharing systems like Dropbox allow us to access cloud based storage systems again from anywhere at any time and share information easily. 
I feel like a bit of an accidental pioneer as without knowing it, I've created a business working in this way. 
Even when I had my last "salary job" which was regional marketing manager for a major USA cosmetic brand, I worked from home and in the hours I needed to get my work done. My office was in New York but I lived in Sydney's beachside suburb of North Curl Curl. 
Property Bloom offers staff a flexible work environment where they can project manage our developments in their own time. This often means some after hours work but also gives them time out with their family, for sports and also importantly, other income producing activities. One of my project managers also owns a palates studio, another runs installations for outdoor signage in his spare time. My admin assistant has two small children to care for. So all their work for me is done in their own time. 
This way of working is flexible and puts less stress on us, so maybe we will continue working into our 80's, although I do hope I'll be at least semi retired by then!  There are health benefits for this flexible working arrangement, keeping our minds active and giving us a sense of contributing.
In all our customs designs for our property developments we are including home offices where tenants have a dedicated work space in case they also want to do enjoy a flexible 'work portfolio'.
Jo Chivers is Chief Executive Officer of property development project managers <a href="https://www.propertybloom.com.au/about" target="_blank">Property Bloom</a>.
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Create your own flexible 'work portfolio': Jo Chivers

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I've been working with our builder on a new range of duplex plans.
We wanted to offer something different to each of our clients, so their duplex would have a point of difference in the market.
Firstly, to clarify, a duplex is two attached villas/units. A duplex can be single or double story. Property Bloom duplexes are predominately single story, three bedrooms, two bathrooms with single garages. We also build a lot of dual occupancy projects with two freestanding dwellings but today we are just talking about duplexes.
Our goal was to make each side of the duplex, each villa, appear separate from the street.  We don't want the 'mirror image' look that many standard duplexes have.
We started by looking at the exteriors of our duplexes. We use a mix of materials rather than just brickwork. We may render or paint the bricks in sections and add some weatherboard or other cladding. Changing the exterior materials adds texture and interest.
We look at the roof design and try to steer away from a standard hip roof if possible. Adding a few gables will add interest to the roof. However, we did have an issue with one council as we couldn't allow any of the roof surface of one villa to drain to the other's side. This was to do with the subdivision drainage requirements, so always check this before getting too fancy with your roof design.
We may use roof tiles or colourbond roofing depending on the look we are wanting to achieve. Colourbond roofing offers a wider range of colour choices, roof tiles give a more traditional feel to the duplex and can be cheaper.
I like to try and make the front facades a little different too. Even though the villas will be attached, it's nice to give the main entrances privacy and by changing the size and shape of the front porches we can achieve a different look.
Another idea is to splint the garages, moving them, to the external sides of the duplex rather than attaching them at the garages. This then offers a double driveway which will be more expensive but gives the impression the villas are more separate than they actually are.
You can also look at locating one garage in the middle of the duplex, and the other to the side. Often service locations like gutter drains may determine the location of your laybacks and hence driveways.
Finally we use the soft landscaping to individualise the dwellings. It is amazing what a good landscape plan can do to enhance street appeal and style.
We take all the design elements into consideration when working on a new duplex project for our clients as well as the location and surrounding homes to ensure we are building the right dwelling for the area. Our aim is to also appeal to and attract the right tenants when it comes time renting them out. A good design can maximise the rent by making your project stand out from the rest.
<a href="https://propertybloom.com.au">www.propertybloom.com.au</a>
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How to make attached dwellings look separate: Jo Chivers

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This week I had the opportunity to run the numbers on an eleven unit development project. 
Normally, Property Bloom clients ask us to source lower density developments such as dual occupancies or three to four unit developments.  Whilst crunching the numbers on this big boy, I started to wonder how many smaller projects we'd need to complete to achieve a similar financial outcome. The answer surprised me. 
What do you need to consider when looking at a medium density development project?  
By the way, density is a measurement used to work out how many dwelling can be built within a particular zoning. In NSW, a medium density zone is defined as 20-40 dwellings per hectare.
1. Finance. Investors can be afraid of jumping from a residential loan to a commercial/development funding and believe that banks will generally lend on three-four unit projects under residential lending. There are a few myths around this. If you have a good relationship manager at your bank, your finances are in good order and you present a larger project to them in a professional way, they will consider it. Also, people assume the commercial funding is going to be more expensive and it can be, but there are lenders out there with very competitive rates. It's imperative to use an experience commercial financier when seeking these loans.  
2. Risk. Generally larger development projects are assumed to carry more risk. Assessment of risk is different for everyone but it really comes down to the bottom line. How much profit is there in the project and is it sufficient to take on the risk? How accurate is the research and cost estimates being used?  What are the current market conditions and are they likely to change anytime soon? This will determine exactly how risky it may be or may not be. 
3. People. A good team is imperative. Because if you don't have a trusted team, you'll be testing the experience and efficiency of these people on a larger scale. If they let you down, you will feel it!  Having a proven track record with your team, particularly your builder when embarking on a large scale development, is critical. 
So just how did we find this development site? One of our clever project managers has a great skill. She communicates extremely well and is a very nice person. She was chatting to one of the property owners in this street and ended up negotiating with this man and his neighbour who both owned large lots in this suburb of Newcastle. It wasn't long before she'd secured their adjoining properties under an Option Agreement.  
One of the main benefits of this agreement is that  there are no holding costs until we are ready to build next year. During this period we manage the design and planning process of the project, so construction can commence upon settlement of the land.
The site is located six minutes drive from the main hospital, twenty minutes from the CBD and ten minutes from the university. There are local shops with a nice cafe, three schools in walking distance, an aquatic centre, gym and a number of parks and sporting fields, making it a very popular with the locals.
Our research tells us that there is strong rental and resale demand. 
I thought I'd share with you the numbers on this medium density, eleven unit project as they are looking quite good: 
Land cost:  $1,040,000 
Stamp Duty and acquisition costs: $45,000
Estimated consultant and council fees and charges:  $86,000
Estimated build costs including contingency: $2,640,000
Option fee:  $120,000
Miscellaneous/other costs:  $30,000
Estimated total costs:  $3,961,000
Estimated end values 11 x 3 bedroom townhouses:  $4,840,000
Estimated weekly rental per townhouse $450 per week
Looking at the numbers, there is opportunity to create equity of $879,000. This is before we apply a project management fee which we will discuss with the purchaser. So the developer's margin at this stage is 22%. The purchaser also needs to include holding costs during the six month construction period. There is scope to increase the equity with playing with the design and looking at other configurations such as including a four bedroom home. We've purposely kept our estimated end value conservative. 
In comparison, a typical dual occupancy project will create around $130,000 in equity at a total cost of $740,000. That's a 17.6% margin. That's not too bad and many of our clients come back to do another one. But you'd need to complete about seven dual occs to achieve a similar equity position as the eleven unit project.
It's interesting to compare the numbers and whilst a larger development is not for everyone, we are excited to be able to offer something different. So, if you are ready to sink your teeth into a large project and have sought professional financial advice, then we've done a lot of the hard work for you. 
Jo Chivers is Chief Executive Officer of property development project managers <a href="https://www.propertybloom.com.au/about" target="_blank">Property Bloom</a>.
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Jo Chivers

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