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How To Become a Real Estate Developer - Articles

Tips and Tricks for Developers: Third-Party Quality Assurance Checks

Date: 29/09/2016

Auction clearance rates in Melbourne and Sydney have been soaring over the past few months, especially in September. Even Adelaide posted a result above 80 percent.

The Australian Bureau of Statistics (ABS) released property price growth data last week, and home prices grew 2 percent over the June quarter across Australia’s capital cities. Over the same period, Sydney property values jumped 2.8 percent, Melbourne is up 2.7 percent, and Brisbane values increased 1.1 percent. Over the twelve months ending in June 2016, Brisbane property prices actually increased more than Sydney.

Once the data for the September quarter is released, we’ll likely see even higher numbers, perhaps up to 4 percent additional growth for Melbourne and Sydney homes. With no sign yet of a slow down over the December quarter, many investors are scratching their heads, wondering how much higher property values can go.

It stands to reason that at some point soon home price growth should flatten, as values keep pushing the boundary of affordability. Rather than speculating on continued capital growth, some investors are turning to more active, manufactured growth strategies, like renovation, subdivision, and development.

In this post, we introduce Dean Parker, a developer in Queensland, and a friend of PropertyInvesting.com. We’ve asked him to share with you some of his insights and wisdom that he’s acquired along the way. Keep your eyes out for more posts from Dean in the coming months.

 

Video Transcript:

Hi, I’m Dean Parker and I’m the managing director of Your Style Homes. In the coming months, I will be hosting a number of video blogs for the PropertyInvesting.com community.

I’ll be talking to you about the day-to-day challenges that we face in our development business and how we overcome them. My hope is that you will be able to pick up some helpful tips and tricks along the way. Really, these are just everyday issues that we come up against that require us to think on our feet and find solutions to.

To start with, I’ll give you a brief introduction of what we do. We’re a development company in Brisbane. We’ve been up here since 2011, but first began operating in Melbourne.

We now focus on townhouse and apartment projects in the Brisbane area. I’m standing now in front of a townhouse project we’re just completing in Coorparoo in Brisbane. There are eight luxury townhouses here, with city views. It’s a beautiful development.

As part of this project, we’ve been able to retain an existing Queenslander that sat right at the back of the block there. We’ve moved it all the way forward to the front. We’ve refurbished it, split it in half, and turned it into two townhouses. We’ve also built six brand new townhouses around that original Queenslander.

At this point of the project, from our point of view, we’re aiming to deliver a really high quality product to our purchasers. We’ve actually sold seven of the eight townhouses off the plan. We really want to make sure that when we hand these properties over that they’re of high quality and that the owners are extremely happy.

We could go and actually do our own defect checking and then give our feedback to the builder. We would do that at a high level just to make sure all the colours are right, the tiles are right and the fixture and fittings are okay.

But what we’re doing because we’re dealing with bigger projects – really, you could do this on any sized project – we’re employing a third company separate to us and separate to the builder to do our quality assurance check.

In this case, we’re using handovers.com, but there are plenty of other companies you can use out there that do a similar thing. Essentially, the process from here is the builder issues their practical completion to say that they’ve finished works, and then we get our independent company in to do a full inspection.

They’ve already been in for the first inspection two weeks ago and found 800 defects. That’s how thorough they are. They know the building code. They know what is a defect and what isn’t a defect. Any tiny little thing they find, they list it.

They basically get all this information to us on one really helpful spreadsheet. It lists the room, the defect issue and then the trade that they think would be responsible for fixing it.

We get that full list, then we give that to our builder. It’s a really easy process then for the builder to fix it. They print it off, they give it to their site supervisor, he goes through it, issues it all to the trades and then they simply work through the list.

Today, we’ve got our independent company back here again, now doing the second inspection. Hopefully, they’re in there behind me ticking all these items off, and we can then finally give the builder our final handover certificate to say that we’re happy with the product that they’ve delivered.

The challenge on this site really was to deliver a high quality product. Now, we’re not builders. We’re a development company, so I don’t really know the ins and out of every little building code that’s out there. That’s why we’ve got this third party company to come in. They know what the rules are.

The other great thing about this is they’re the meat in the middle of the sandwich. It’s not us being particularly difficult with a builder. It’s an independent company. Really, we’re just the conduit between the two.

The way that we’ve solved our problem here is to get this independent company in. They take away a lot of the headaches. It means that instead of us rushing around trying to do this defect processes ourselves, we can now deliver a really high quality project knowing that an independent company has done a full inspection and that we’ll get the project delivered on time and with a great finish.

I hope you got some value from our first video update. We’re looking forward to working with the PropertyInvesting.com community and delivering a lot more tips and tricks over the next few months as we progress through the projects we’re developing up here. We’ll see you soon.

This video transcript was edited slightly for readability.

Profile photo of Dean Parker

By Dean Parker

Dean Parker is the Managing Director at Your Style Homes. After completing a Bachelor of Commerce and Science, he spent time working as an accountant and IT specialist but discovered his true passion in 2004 when he and his wife Elise renovated their first home. Fast forward to today and Dean has been involved in almost 300 real estate transactions worth almost $70 million dollars, including renovating 200+ dwellings and developing 105 new townhouses.www.yourstylegroup.com.au

Comments

  1. Steve

    Thanks Dean – a nice tip especially as it removes any conflict between you and the builder. I may use it on my current development (splitter – 2nd house) How much would such a service cost?
    Steve

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