3 Top Tips for Selecting Your Development A-Team
By Justin Eslick
Recently I was asked to write a development focussed article for the Reno Kings newsletter. Unfortunately before I had a chance to get started my family's life was thrown a curve ball. We took our 4 week old baby to the doctor for a fairly routine check up and ended up in the emergency ward - she has a large hole in her heart, but thankfully as far as cardiac issues go, this is at the less extreme end, not that any cardiac issue is a good thing, especially when it involves open heart surgery - as Lacey has just undergone this week.
My wife and I are very fortunate that we have fantastic family support. This has enabled us to keep a bedside watch on Lacey on a rotating basis while still allowing us to do a little bit of work and spend a little bit of time with our three year old son.
This leads me to the topic of this article. One thing I can tell you without a doubt is that when you develop property you need to have a good support team behind you - much like my wife and I have at the moment while dealing with our daughter's health. Some may think it crass or tacky to link a development article to our current situation, but the analogy is a strong one and an active mind is healthier than an idle one at a time like this!
The truth is, no two developments are the same and while there is great upside to developing, it can be a complicated process. So you need a support team. You need experts you can call on at any time and get the quick answers you need. Development is hard enough as it is, so you don't want to be doing it 'on the fly' without the right education and the right team behind you. This isn't something you want to 'learn on the job', though plenty of that will still occur.
When it comes to property development we call your support team your 'Development A-Team'. This includes anyone you may need to call upon at any stage of a development, and includes the consultants and professionals you engage before you even consider buying a property, such as accountants (you can end up paying a lot of tax when developing if you don't have the right entity and strategy from the start!) and solicitors. It also encompasses engineers - there could be up to half a dozen of these, from civil and hydraulic engineers, to structural, acoustic, traffic, fire and mechanical engineers, etc. The list goes on. There are surveyors, quantity surveyors, town planners, designers, builders, agents, valuers... you get the drift.
Who you employ and when differs from location to location and project to project, so I won't list them all here. What I will do though is pass on my 3 Top Tips when it comes to engaging your A-Team.
1. Have your A-Team in place before you start or before you need them
Often you will require quick answers and I can guarantee that you won't receive these by cold calling from the yellow pages. For example, you've just found a ripper deal and you think you can develop 4 townhouses, but you really do need to get it checked over by a planner first. The trouble is, someone else has made an offer with a short conditional period, so you need answers fast. First thing, you shouldn't call council for answers. This is the first big mistake by newbie developers. Council will tell you what the rules say, a private planner will tell you what rules can be broken. Secondly, you will not get answers quickly if you are calling someone who you are calling for the first time and has never heard of you before. Even if you manage to get some quick answers, it will cost you. Secondly, this process may need to be repeated 3, 4 or even 10 times before you purchase the right property... the result is likely to be a planner who eventually won't take your call! So find one NOW and discuss your requirements. Perhaps come to an arrangement where you pay a fee upfront for immediate answers and this fee comes off the job if they are engaged to carry out a report.
2. Have an understanding of each consultant's role and when to employ them
There are consultants you won't need until construction, however, their input early on may be valuable down the track. For example, Paul Eslick of the Reno Kings received a fabulous approval for a property he has since developed and made great money from, however one mistake he made was he had a design drawn up and an approval granted. He then went and got a soil test and this came back saying he had terrible soil. He was stuck with a design he had to work with and now it needed an extra $15k worth of concrete for footings over another design he could have used incorporating posts instead of slab on ground. This is a mistake that could have been prevented had he had the soil tested from the start, yet nobody ever does this because it isn't required until building approval stage.
3. Request quotes in advance and ask for “apple for apple” quotes
Every consultant has their own way of wording a quote. In most cases, the inclusions and exclusions are the same, but the wording they use can throw us. In some cases the quotes you receive can be for vastly different services, even though you went to the same consultant type (i.e. a civil engineer). So find out from your planner, designer or certifier what you require and ask your consultant specifically for what you want, rather than just 'please quote from whatever is required from a civil engineer for the purpose of obtaining a DA'. If you need to, have your planner, designer or certifier request the quotes for you and read through them. You'll pay an extra fee for this, but it can be well worth it, especially if you end up asking for 3 quotes from each of the 10 different consultant types you are going to use.
You should also ask for the quotes in advance, this way there is no surprises! I had a client who recently went with an architect who was (and still is) brilliant, however, he only asked for a DA quote, not a quote to then complete the BA stage as well, despite my recommendation for a full quote. Unfortunately, once he did receive the full quote, to his dismay the remaining services were double what he had expected.
Having the sharpest available, qualified professionals supporting you through what can sometimes be treacherous process assures you of the best possible outcome.
Take all steps to surround yourself with a skilled and switched-on support team and you can expect a great outcome.
It's no longer as easy as it used to be to make capital gains just buying and holding property. You now need to know how to create your own capital gains, rather than wait for it. You need to know how to uncover and utilise a free block of land, how to create multiple streams of income from the one property, how to capture and capitalise on growing niche market areas, how to create positive cash flow – but equally important, how to do all this and avoid the pitfalls.
Developing property is a step-by-step process that can be learned, even if you’ve never developed before. The Reno Kings “Developing for Profit” Home Study Course makes it possible for you to learn this process in the comfort of your own home. With backup support from the Reno Kings’ team and a 100% Money Back Satisfaction Guarantee, it’s a smart choice to make to make a change for the future.
By Justin Eslick
© Investigate Property Pty Ltd, 2012