All Topics / General Property / Developer Woes

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  • Profile photo of DarrenDarren
    Participant
    @7black
    Join Date: 2017
    Post Count: 5

    A story of caution & a solution?

    We bought a corner block in a popular country tourist town with views over the town facing South East to build our new family home. We then sold our family home of 14 years in the nearby city to escape to the country for a quieter life. Our two teenage children moved to a new school, we also took up new jobs in town & also in a nearby town taking up renting a cheap crappy house, that became moldy with the winter rains, to save some money for some extra niceties for our new family home. Or so we thought.

    Initially we custom designed a house, as we were unable to find a suitable plan due to the site being both slopping & tapered, to face out looking over the town. Each room stepped back to conform with the taper & remain within the building envelope. But, this was rejected from the developer, not council, as we were told the front needed to face West. Ha? We were baffled.

    Anyway, we came up with another design to suit the requirements. What I did was cut up my original plan & rearrange so all the living space would take in advantage of the views. The layout was spacious flowed well with lots of natural light taking in views over the town. It took several iterations as it wasn’t what we bought the land for, so couldn’t settle on a design. But. We waited & waited & waited for our final plans to return from the builder.

    Eventually with pressure they sent finals, after we paid deposit too, but the plan was different from that which we signed. What the builder had done was move windows in living area that also removed views, & our signatures had been grafted onto these new plans.

    When I approached the sales guy regarding these changes he totally ignored my question & tried to change the topic. This was in form of emails, many many phone calls with face to face communication without one single response. All I got was, why are you so upset? & change of subject but totally refused to answer my question. This made me more enraged!

    I eventually requested a different sales person, which went higher in the company (one the biggest in the state) as my request was ignored but I made more noise the more they didn’t respond. Eventually I spoke to someone higher up & then higher again as my request was not met. I was told they couldn’t change sales person, to which I responded, “we’ll cancel contract if you don’t”. They said we couldn’t cancel, but when I brought their attention to the doctored plans & the mention of consumer affairs they listened. Listened intently too.

    We got out of the contract with a semi-refund & they had the cheek to send a gift voucher should we return or a friend/family member sign up. No way! What I did was wrote expletives on that voucher & return to sender. Would you want someone you know to go through that? ok, maybe you do have someone in mind.

    So, we find ourselves back at square one with a vacant block of land, the desire to build without a plan or builder.

    We decided to go down the path of building an energy efficient home, finding a builder with a sound reputation we settled on one.

    We ended up modifying one of their plans that was a bit similar to the second house I designed. Sales was excellent. Can’t fault. Listened & communicated so differently to the other guy who was always in a rush without taking the time time to consult. Cookie cutter house builder with a sales guy to reflect that. Oh, have I learnt.

    The entire process was top notch, very professional, everyone listened & responded to anything from reception & sales to selections. Brilliant.

    But then time went on. The plans for final submission took a very long time to return. I contacted the builder, I felt as though I was being stalled & couldn’t figure out why. Eventually they got back to us, not my sales consultant, one of the managers. He didn’t call with good news.

    Our plans were held up with the developer. When we bought the land, the only encumbrance was no transportables. Our house was on a concrete slab foundation with clad externals, mostly hebel for energy efficiency. However, unknown to us & the builder, at the time of singing contract one little house built on site that resembled a transportable home. In fact it is part of their transportable range. Council approved, but when the developer found out he was not amused & but a blanket stop order on anything other than brick construction.

    This didn’t comply with newly updated encumbrance that was written in black & white when we bought the land. We fully complied.

    So, he had a knee jerk reaction & killed our plans. Their are several other clad homes in that estate that have been there for a couple of years. We didn’t know what to do. Here we were, contracted to build a house we liked on land we liked but couldn’t do anything. We were the meat in the sandwich, or, which came first, chicken or egg? situation. We couldn’t move.

    We became very stressed. Our situation was we were renting a crappy house we didn’t want to live in, money lost with a previous builder & money down with another builder. With two teenagers, the house we promised was not to be. What to do?

    We decided to sell the land & move on to something else. So it was listed for sale.

    We’ve both had stress leave from work & many heated discussions. I had an anxiety attack & found myself in hospital. We were very stressed. Felt trapped.

    A solution was needed & fast.

    One day I received an email from the estate agent with a report on the listing (land). It was not good. After nearly four months on the market, not one inquiry was made. I called the agent, she went onto explain that other blocks had been listed for up to two years without inquiries but other blocks in nearby area had sold. The estate is peaceful with a terrific outlook. So potentially we could be holding onto a block with no value. What to do?

    I began thinking less like a victim & more like a winner. I figured I had needed to change my mind set & move outside the blinkers & find a viable solution.

    So, I researched. Looked at the demographics, spoke to estate agents, the council & builders, but the developer won’t return requests.

    Through research a picture began to form of what a possible solution might be. The demographics is approx. 60% retirees who generally don’t want to build, especially on a slopping block, but want turnkey properties. There is also an apparent lack of rentals in the area with demand for more from agents. They always want more listings anyway.

    The solution became clear. We should build a house that suits the developers new encumbrance & either sell the house or keep it as a rental. Firstly we needed to resolve the issue of being contracted to build. They wanted us to take legal action, which we don’t have the resources that would only benefit lawyers, I gave them a firm no. They wanted to hold us to that land, which they were not able to build on. So, I negotiated new terms to build a house with them after we have built a house on our current land with another builder, where ever that would be. So the search began for a new builder.

    A new construction had begun opposite our land so I did my due diligence & it turns out they have a good reputation for sales, after service care, & with sound buildings. I knew some people who had built with them too, also a work colleague’s husband was a brick layer with them for a longtime & I had nothing bad to say, in fact they built their family home with them. (Beautiful home).

    As of writing, our plan is to build a house that would suit a retired couple (already with builder) but also provide a positive cash flow if it would be rented, also provide an approximate capital gain of about 20% should we sell. With this new builder & outlook we provide a solution to what we thought was a never ending story of hard-ache & stress.

    We cannot find any other solution that would provide a positive outcome, but if someone has a suggestion we are open to ideas.

    We’re not going to stop with this one construction either, as we have free capital, even though renting after being home owners we are free to expand on our future. Having all of our money invested in one house (family home) doesn’t provide enough capital to fall back on to get out of a sticky situation.

    The sad thing is, as not only has this been very stressful, our older teenager will not live in our new home. He is disappointed. So are we for him. But, for my wife & I see, I now only see opportunity.

    A strategic plan has been discussed & written with action being taken to grow our future. It’s books like what Steve McKnight’s & forums like this that inspire us to move forward from what was a negative situation.

    • This topic was modified 3 years ago by Profile photo of Darren Darren. Reason: Missing a vital piece of information in the introduction
    Profile photo of wilko1wilko1
    Participant
    @wilko1
    Join Date: 2010
    Post Count: 510

    Hi Darren

    A disappointing story to be sure when you just want to be heard and are treated indifferently.

    One of the issues you are having here is you constantly approaching different builders.
    Approach a building designer only, agree with that designer that you will own the copyright of the plans so that if you choose to tender with multiple builders you can do so and choose the lowest quote or at least have multiple options.
    By constantly doing your plans with different builders, they each own the copyright to the plans.

    Can you give a bit more detail, what area, what suburb, how much did you purchase for.

    Also just to be upfront, if you have difficulty dealing in this and it is causing you stress and anxiety it might not be something to consider for the future.
    What is the reasoning for feeling trapped? Have you paid to much for the land and now you cannot seem to get out of it even by selling the land at a lower price or are you trying to sell for a higher price then you paid to break even after duties and sales fees? Health before wealth Darren, getting out of this deal even at a loss is better then going into the ground.

    Id like to help you more if you can give more detail.
    Take care. Cheers Wilko

    Profile photo of DarrenDarren
    Participant
    @7black
    Join Date: 2017
    Post Count: 5

    Our original builder doctored our signed plans & wouldn’t answer as to why or use the plans we signed, so if they were to be trouble on paper, what could we expect during construction? We weren’t willing to find out. This was meant to be our family home. We want to build our family home with the second builder we are contracted with but on another block. It’s a bit too late to go to a designer with the current plans as the they are already with the builder, however, we will use your advice next time.

    We felt trapped as we could only see ourselves stuck holding a piece of land that could sit on the market for a very long time & be left renting with the possibility of the only way out being a course of legal action. Have we made the right decision by moving to this town? Time will tell.

    I won’t go into details on an open forum as legal action is taking place with developer, builder & someone building a house.

    The land is the correct value, we haven’t lost money on that, but only partial deposit with first builder & of course rent.

    This has been a tough lesson.

    • This reply was modified 3 years ago by Profile photo of Darren Darren.
    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    Hi Darren,

    Thanks for sharing your story.

    Yeah, sounds like a very tough lesson but think how easy breezy future challenges will be! 💪👍😎

    It’s interesting how you mentioned that vacant lots are not selling in that estate but once you build, you’ll be 20%+ in profit and CF+! There may be some opportunity there? (Buying more vacant lots from distressed owners, build, refinance and rent) could be a very interesting and profitable excercise.

    Are you still renting the place you don’t like? That’s never good. If you’re planning to become a rentvestor (like I was for a few years), I would suggest moving to a nice rental 😊

    Hope this helps?

    Please keep us in the loop. We are all here to learn.

    Best wishes,
    Ethan

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of DarrenDarren
    Participant
    @7black
    Join Date: 2017
    Post Count: 5

    Thanks Ethan, it’s funny you should mention looking for another place – we have broken lease & are looking for a place right now. Established properties sell, but not many are interested in building as I’m told from real estate agents. Not sure why? The hassles of building perhaps for that demographic? Valuation is loosely based on agent opinion, so perhaps less? 15%? I guess I have to wait for evaluation. I am learning, though it seems to be the hard way :)

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    Hey mate, I think it was hard because your emotional need for a house met a wall. Now that you’re looking at it as an investment, things should be easier 😊

    I would look at sold prices in the area, existing sales as well, how long it took them to sell and for how much so you could estimate the end price and profit.

    Yeah, people can be lazy and most buyers, it seems, just want to move in. So if vacant lands aren’t selling but houses are at a good profit +cf+, you may be able to make killings there 👍😎

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of DarrenDarren
    Participant
    @7black
    Join Date: 2017
    Post Count: 5

    Ethan I’ve taken your advise & looked at past sales & current listings. I gather maybe 14% with a positive cash flow. Thank you for the tip.

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    Ethan I’ve taken your advise & looked at past sales & current listings. I gather maybe 14% with a positive cash flow. Thank you for the tip.

    Sure thing, happy to help 😊

    14% is nice but usually most developers won’t look at anything below 20% (not enough margin for errors, issues, market changes) but I guess that I f it’s easy and you’re happy with the numbers, you might have found a nice niche for yourself! 👍😎

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

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