You’ve selected your site, conducted your feasibility studies, gathered a team of professional industry experts to help you navigate the sometimes rocky road of property development, made your way through the council’s bureaucratic maze of red tape and managed to obtain finance for your project.
There’s only one piece of the puzzle missing – the realisation of your development dream as a physical reality.
Most sites you buy to develop will already have an established, older building on them that will need to be demolished to make way for the new construction.
A demolition contractor who has the ability to handle the scope of your project is required and once you find one, it is your responsibility to provide him with a brief detailing exactly what is to be removed from the site.
This may be more than just a dwelling and could also include such things as outbuildings, sheds, paving, fences and trees.
Be sure to specify that all footings, paths and tree roots are also to be removed.
I have known some demolishers to leave tree roots or footings and bits of concrete and rubble under the ground, so ensure these are all removed prior to paying your contractor.
It is likely you will want to retain some trees, or you may have to as part of your development approval, so it is up to you to devise a system that identifies them.
We tie yellow ribbons around the trees to remain and put in writing that the demolisher must confirm all trees to be retained prior to commencing the job.
You will need a demolition permit prior to commencement of the work, which is usually obtained by the demolition company through the local council or an independent building surveyor.
Prior to obtaining the demolition permit, you will need to provide evidence of proof of ownership stipulating that you are in fact the owner of the property.
Before demolishing a house on your property the following must be undertaken either by yourself or the demolition contractor;
1. A plumber must be arranged to cut off the water supply and return the water meter to the local water authority,
2. The electricity authority must be contacted and asked to disconnect the electricity and remove any meters,
3. The gas services must be cut off and the meter returned to the gas authority,
4. Telstra has to disconnect any phone lines.
Once demolition has been completed, you may need to erect a temporary fence around the property to ensure the site is safe and secure.
When the site is cleared of all unwanted infrastructure, it’s a good idea to replace any old fences with new ones while access is relatively easy.
As is stated in the Fencing Act, your neighbours are responsible for half of the cost to erect new boundary fences that abut their own property, unless there is a special condition within your development permit that specifies you are required to meet the full costs.
Call one or two fencing contractors to obtain quotes and then take these to your neighbours to discuss them.
Often neighbours will be reluctant to pay for fences, particularly if they are opposed to your development in the first place and they think that they are paying for something that will make you money but do little for them, which in their mind is unfair.
To avoid or minimise any such disputes with neighbours, it’s a good idea to conduct a thorough inspection of all boundary fences and adjoining buildings, photograph them and date stamp the pictures and make notes about their condition prior to commencing any work on the site.
The stages of construction
Once you have adequately prepared your site to allow for the building of your project, it is time for your builder and project manager to work as a team and get the construction of your development underway.
Let’s take a look at the various stages that are involved in this final step toward making your development dream a profitable reality.
The construction of your project occurs in a number of distinct stages, with your building surveyor conducting an inspection at the completion of each stage to ensure the work complies with building regulations and give the builder permission to proceed to the next stage.
The stages of construction are listed below, from start to finish.
1. Site works
The site works involve;
• Set-out – the footprint of the proposed dwellings are measured and pegged out on the site in preparation for excavation and footings.
This is often done by a surveyor to ensure accuracy, particularly if there are extensive walls built along the boundary of the site or the site has an irregular shape.
• Provision of water, sewerage and drainage facilities – the pipes for these services need to be laid before any concrete slabs are poured.
They are constructed as detailed in the engineer’s drawings and as approved by the responsible authorities.
Other underground services are also provided at the beginning of the job, including electrical power, gas and telephone.
• Rough levelling or backfilling of the site is completed by the builder once all of the underground services listed above are installed.
• Excavation for footings is completed and excess soil is removed form the site.
2. Base Stage
Stumps for a wooden floor or concrete slab, which have been engineered according to the site’s soil conditions, will be completed by the builder.
Occasionally, when the site has to be filled for various reasons, special floating slabs or piers are designed by the engineer.
3. Frame Stage
The floor, wall and roof frames and windows are completed and you can finally see your project starting to take shape.
4. Lock Up Stage
This is an exciting stage for any developer who can now see the architect’s drawings start to move from an image on a piece of paper to a physical reality on their site.
At this point in the build, brickwork or rendered lightweight material up to the building’s eaves goes on and external doors are installed.
5. Fixing Stage
Glazing and door furniture, flooring, plumbing, showers, baths, bench tops, cook tops, ovens and cabinetry are all installed and completed.
The end is in sight and soon you will reap the financial rewards for all of your hard work and patience, as the finishing touches are attended to by your builder.
Carpets and tiles are laid, a coat of paint is applied, floors are sanded and polished, fittings and fixtures are adjusted as required and any external works stipulated in the building contract such as landscaping and paving are undertaken to complete the package and make your project a liveable home for tenants or buyers.
As your development takes shape you may need to make variations to some elements of the project.
The builder should provide written details of the variations you have requested, together with any additional costs associated with these changes.
The builder’s mark up (profit margin) on variations will generally be specified in the contract but it is generally in the order of 20%.
Remember that variations may also affect the agreed schedule for completion as they could cause delays and this should be noted on the variation form.
Acceptance of Completion
Once the build is complete and prior to you taking possession of your property, the builder will walk you through the project.
At this point you will have an opportunity to list any defects or problems you might notice that require attention.
You should list all of these issues and give them to the builder in writing, with both of you signing off on the list to acknowledge you have informed your builder of the problems and he has received an outline of your concerns.
Your builder is obligated to rectify the problems listed and the details of how and when this should occur are in your building contract.
If any disputes arise with regard to fixing outstanding issues, there is information within your building contract about who you can contact to assist with the resolution process.
If an architect or development manger is handling the project for you, they should provide a note stating they are satisfied that the structure has been completed satisfactorily.
The time has come to start making a profit from your project and marketing it to tenants or potential buyers, depending on your investment goals.
However you cannot tenant or sell your property until you obtained an occupancy permit or certificate of occupancy as it is known in Victoria.
An occupancy permit is issued by the building surveyor after they conduct a final inspection.
You must also provide them with Compliance Certificates from the various trades you have contracted, including the plumber, electrician, heating and cooling installers and insulation installers, certifying that all of their work has been completed correctly and according to legislative requirements.
Once you have obtained your occupancy permit you may think that all of the hard work is over, as your project is finally ready to generate an income.
But the reality is, in some respects, the hard work is just starting.
Now you have to market your property and make it pay dividends, either in the short term as a sale or the long term as an equity building rental.
In the Part 18 of this series I’ll take a look at the best ways to make money out of your development property.
If you want to learn more about the property development process you may be interested in How To Get Started in Property Development
SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
PREFER TO SUBSCRIBE VIA EMAIL?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.