5 Tips on Redeveloping Properties
Redeveloping a property is a smart move for most homeowners because there is a lot you can do with a single property. You can knock down rebuild, or possibly make it a split block, or something else that can give you more income. Here are 5 tips that you can use if you ever do decide to redevelop your property.
Select the right broker.
First of all, property redevelopment and property development is as much a finance game as it is a property and real estate game. So selecting a broker that understands a complete valuation and building contracts, and how the drawdown stages work with negotiating with a builder is very, very important. Because if you don’t get the money, the Monopoly game doesn't happen. So get a broker who understands building finance and you won't go wrong.
Understanding different builds.
Second is understanding the difference between an off-the-shelf build from a builder. Bigger builders offer designs that they build, so it would generally be more cost effective and they can give you a fixed price. Then it would be easier for you to look at the land plus the fixed price build contract quite easily. So the tip here is to approach a bigger builder first for the block, to understand how you can develop that block without actually going to an architect or a designer to design a one-off custom for that actual block of land.
Employ an architect.
Employ an architect to draw up a one-off plan for that actual site. That generally can be more expensive because the builder has never built that before, so you need to get it designed. If you do have a sloping block, you would obviously need to get something custom designed, because there are not many designs out there that can suit sloping blocks. So know that it is crucial to understand the difference between a custom build and an off-the-shelf project build that can be done.
Find the right agent.
You need to find an agent who really understands brand new builds in their marketplace. You don't want to under-develop your block, and you don't want to overdevelop your block. So have a chat with a local agent in your area that can actually say to you what the market dictates in those areas. You need to find out whether you're going to overcapitalize or under-capitalized and make sure you get it right. So it is very important to have a good real estate agent who can understand new builds, and really work out what land's worth, what the build's worth, what it's going to be worth.
Know what a building contract is.
If you don't know how a building contract works and you've never built before, have a professional look at it. Find a project manager, development manager, and architect. Lean on those people for support. Ask people that have done it before, to make sure you get your contract checked because there are builders out there that will try to do a build that will work out in their favor without much care if it can be favorable for you. Make sure that before you enter any contract that you are able to get some legal advice around that. A finance broker can point you in the right direction because you really need to make sure that you don't leave yourself high and dry when it comes to construction.
Bonus tip…budget!
Budget encompasses a lot of the other things, so make sure your project stacks up with all the other tips that we've just outlined. Saving money in the design process and the selection of what you're going to build as opposed to building then try and save money, that's not going to happen. You're going to spend more money trying to save money during the project. So design for a budget first, get that on paper and then roll with it.
Just a side note. Make sure you get a good rental appraisal because that could help when coming to actually get finance for it. And knowing that you have an asset that you can rent out if you needed to move out so you can change your loan to interest only and rent it out as an investment is always a good idea.
So, that's it for the property tips this week. If you do have any questions at all or you may want to discuss how to capitalize on your investment, give me a call today on 0402 909 727. Thank you very much.
