Mr. Billion Dollar Property Developer, Bob Andersen, covers a few post-property development activities that you shouldn’t miss.
Hi, Bob Andersen back again.
I’d just like to take you through almost the last cycle. What are we doing? Well, last time we talked about building construction, and we took it right through to the end with the builder. The builder’s pretty much finished.
There’s a flurry of post-property development activities. In fact, there are people you can get to do this for you but prices are pretty simple.
WHAT CERTIFICATES DO YOU NEED AT THE END OF CONSTRUCTION?
The builders pretty much reached the end of construction. So at that point, one of your post-property development activities is to get the private certifier in to give you a Certificate of Occupancy or a Certificate of Classification. These certificates state that a particular property can now be occupied — that someone can live in it.
WHAT IS THE LAST STEP IN THE PROCESS OF CONSTRUCTION?
If you’re going to keep these townhouses as an investment, you can actually put a tenant in once you get the Certificate of Occupancy from them. You also need to check for any defects. I mentioned this in the last video. In fact, we sent an expert in. They call it final checks, hand-overs — a lot of different things. These people would go out on your behalf and look for defects that the builder needs to fix.
In a lot of states, builders have to guarantee against defects for a certain period of time. It could be 6 months or 12 months, depending on which state you’re in. What you need to do is get the defects fixed now, and a little bit down the track before your defects period runs out. Check again so the builder has to come back and fix those. This is what we call hand-overs. The builder who’s had legal possession of the site, now hands it back to you. It’s finished construction, defects been checked, certificate of classification or occupancy’s handed, and now’s it’s the official hand-over.
WHAT SHOULD BE PAID FULL ATTENTION TO AFTER HANDING OVER?
As you go about your post-property development activities, you need to be careful about insurance. A lot of people miss this.
During the period of construction, while the builder’s been on site, everything is under the builder’s insurance. He’s got various types of insurance—worker’s compensation, public liability, all risks, all that sort of insurance—on the site. But after hand-over, the owner or buyer of the building doesn’t have insurance.
It’s lag time, it’s this period of time where you need to get some insurance. You need to go to a good broker. If something happened during that period of time, you’re exposed, and I don’t think your financier would be really happy. So that’s important.
WHAT TO DO WITH TITLES IF YOU DECIDE TO SELL THE DEVELOPED PROPERTY?
The other part to it, of course, is you need to get the titles. So if you’re going to either keep the property yourself as investment or if you’re going to sell them, you need separate titles. In our case study, we’ve got 4 townhouses on 1 block of land, and we need to create 4 townhouses on 4 blocks of land. We can call that straddling.
Pretty much around the end of construction, the surveyor comes back in, does the final survey of the individual townhouses, and produces a survey plan.
That survey plan then goes to the council, and the council has to look at the survey plan. The council then goes through the different conditions of your development approval to make sure you’ve met those particular conditions. But there’s one thing they really want: contributions.
Usually with property development, contributions get paid to council. In fact, there are some councils here in Australia—even in Victoria—that don’t have contributions, and there are some councils that are very strong on contributions. They won’t put the final seal on that survey plan that you need to get your titles until you have paid those contributions.
Once you’ve done that, they’ll seal the plan—what I mean by sealing is the council puts their stamp on that survey plan. Normally, it would go to the lawyer who would package it up, send it off to the relevant state department that handles the titles and then you get the titles out. It can be a fairly quick process. There’s often consulting surveyors that can handle that process for you if you want to pay someone to do that. But what you want are the titles.
WHAT I HAVE EARNED AFTER RECEIVING THE TITLE AND SETTLED THE DEVELOPED PROPERTY
In my case, the 4-townhouse project, we wanted the 4 titles so we can settle with 4 different owners. A little bit busy at that end, but as in all property development, there’s always an expert that can do some of that work for you, or a lot of it.
Once you got the titles, you can settle. Now you got the money. I tell you what, it’s pretty exciting, you know. An average townhouse in any capital city around Australia—if you’re talking averages—you’re probably making around $300K profit per townhouse.
If you’re going to do a 4-townhouse project, you’re going to make about $400K. I tell you what, it’s pretty exciting stuff to watch when a property settlement happens and watch your 4-figure chunk of money landing on your bank account. Maybe a week or two later, another 4-figure chunk. A week later, another 4. It’s pretty exciting stuff. That’s why property development is stand-alone when it comes to making great amounts of money in a small amount of time. It’s pretty exciting.
But you’ve got to get your titles out to get your settlements. And then you’ll get your money. That’s how it works.