Author: Steven Chandler – Managing Director – LEFTA Corporation Pty Ltd.
If you are new to property development then you are reliant on your experts for their expertise, knowledge, experience and their guidance. This is why it is so important that you have the right experts providing advice.
There are many things that can go wrong during a project. The project in this image had quite a few. For starters the developer was a corporate company and over the life of the project there were seven (7) development managers (that I am aware of). Can you image the loss of knowledge and continuity on the project?
On this project the original builder went broke leaving a huge mess behind with unpaid subcontractors, the requirement to find a new builder willing to take on the work already constructed, an additional cost to absorb and the delays to settlement.
And when construction got back on track and approached completion there were problems with the strata plan; Council would not release it as it was different to the development consent. To make things interesting a number of parking spaces had been sold that shouldn’t have; more delays and loss of revenue plus a potential class action to deal with.
Of course, as this was a waterfront property with marina berths, there had to be a problem with the number of berths approved. Yes, less berths than what had been sold therefore another group of disgruntled purchasers.
So this two (2) year project took four (4) years to complete. Not bad? No, not bad; disastrous! How could a profit margin survive that?
Here’s the wisdom:
- If it’s your project make sure you stay on top of it all the way through.
- Make sure your experts know what they are doing.
- Do really solid due diligence on your builder remembering that last years “books” could easily be decimated by one “bad” project this year.
- Know what you are developing, what Council has approved and what you are selling; make sure they are all aligned.
- Get it done quickly and professionally.
- When something goes wrong, action it promptly.
- Watch out for rocks.
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