Andy approached us in mid 2020 with a common brief:
Find him a profitable development project site +/- $1.3m, oversee all planning and design, tender the build and oversee construction.
We quickly zeroed in on a few suburbs that suited his parameters at the time (note: very few areas in Melbourne promise profitable projects, and these areas change regularly due to trends in land prices, construction costs, supply/demand, resale values, etc) and we identified a couple suitable sites within a fortnight.
Our preliminary feasibility studies provided high level estimates of market values, site yields, costs, equity/debt requirements, and profitability.
Being interstate, we provided Andy with detailed suburb profiles that explained why these target areas suited him. Below is an example of some of the info we include.
Andy, being a relative novice to property development, had plenty of questions, and we were very happy to explain everything to him:
- zoning impacts to yields (number and size of dwellings) through coverage calculations, setback requirements, private open space v secluded private open space, etc;
- how local area buyer demand and demographics impact upon optimal yield and build specifications;
- how we determined resale values based on comparable sales and local agent advice;
- the difference between town planning documents, architectural drawings, and plans of subdivision;
- the key milestones of development projects and how much savings he would have to deploy throughout the project;
After running through the projects in detail, we agreed that this property at 27-29 Grove Street, Vermont was ideal for him https://www.realestate.com.au/sold/property-house-vic-vermont-133375694.
I quickly firmed up our feasibility study, with feedback from Council, our preferred Town Planner, Arborist, Land Surveyor, Conveyancer and a couple local agents.
The numbers stacked up really well, and the unique nature of the Vendor Statement meant that we could quickly subdivide the property into two separately titled lots prior to any planning, which would dramatically de-risk the project.
Via Sale by Set Date negotiations with the selling agent, I secured the 1230 m2 property for a bargain price of $1.241m.
Importantly, I knew the agent pretty well, and, while ethical throughout, she was definitely more forthcoming with information than she would have been with a typical buyer.
Andy duly paid us our Buyer Advocacy Fee of 1.8%. We then provided a Fee Proposal for overseeing the Planning & Design for two large Hamptons Style detached houses, each on their own title and with street frontage.
We liked Andy, and offered him a heavily discounted rate of $15,000 to secure a planning permit and complete all build documentation required for build tender.
I assembled the team of all property development planning consultants required.
Each consultant prioritises my work at a discounted rate because of the mutual respect we’ve built up over many years. They would invoice Andy directly for works, but report to me.
I project managed the entire design process and tied Andy in when his input was required. But given that he is a busy IT Professional and I develop property for a living, he was happy to let me run it with maximum discretion.
Whitehorse Council were unnecessarily difficult, and we copped some stupid delays associated with some trees that their own Arborist agreed were of Low Retention Value and should be cut down (they were weeds FFS!), but we eventually attained the permit for our ideal plans.
We moved onto completing build documentation – architectural drawings, civil and structural engineering, build specifications, etc.
Andy duly paid us once all approvals and documentation was complete. He then appointed us to project manage the build tender and construction on his behalf at a heavily discounted rate of $40,000.
We selected two suitable builders, and went through a detailed tender process for a complete turnkey product that included demolition, landscaping, and everything in between.
Andy accepted my recommendation, and entered into a fixed price build contract with a great builder who we have several projects with.
The strength of my relationship with the builder meant that even though construction commencement was delayed by months due to finance and other issues, he has absorbed the crazy construction cost escalations that have hammered the market over the last year.
Construction is progressing well, notwithstanding COVID-related challenges. I have just made all the detailed specification selections on Andy’s behalf – floorboards, kitchen cabinetry, stone, carpet, colours, etc.
Recent local agent feedback on resale estimates is well above even our most optimistic predictions at the time of purchase.
Andy’s objectives have changed several times throughout the project, from retaining both dwellings, to selling both dwellings, to retaining one dwelling and selling the other off-the-plan. Regardless of what he chooses to do, he will make well over $600,000 profit from this project – after all of my fees.
He will do extremely well out of this quality property development that we have managed for him.
I am really proud of the work that me and my preferred consultants have done for Andy.
We’re looking after the entire project for him for end-to-end while he continues working full time as a busy IT Professional. He’s no doubt learned a lot through the process.