#259: Home Building & Development Project Perils - Tackling Escalating Expenses, Development Finance, Project Overruns & Their Impact

The Property Trio

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This week, we unpack a fabulous listener question from Melissa. "What advice would you give to those of us who have construction loans were the build is dragging and we're being squeezed between increasing rents, increasing interest rates, and increasing construction costs?", she asks. "And what advice would you give to anyone considering a construction loan? "
Cate steps through some of the planning, building and environmental issues that can threaten a build or renovation.
Mike sheds light on the flow-on effects that are triggered by planning and building delays. From overcapitalisation to materials surcharges, council enforced orders and others, there are some serious risks that must be considered by those who decide to build or renovate.
How can renovators avoid some of the stressors? Dave has some good tips...
How many people consider the contractual details, milestone payments, additional costs and cashflow considerations? It can be tricky to navigate these points, but Mike has some great ideas he shares with the listeners who are considering embarking on a build or a renovation.
How long should people spend in the planning phase? Mike sheds light on some of the elements that get missed at the design phase. Did you know that approximately 60% of defects occur at the design phase?
The Trio share their advice for those who are thinking about a construction loan. Construction lending experience is critical, and Cate and Dave chat about the key differences between traditional, established-property lending versus construction lending.
And what is an "as-if completion valuation"? And what is the process that needs to be followed? Mike gives us some valuable insights into the role of a Quantity Surveyor.
..... and the gold nuggets!

Cate Bakos's gold nugget: There are three things that Cate thinks are really important to nail. 1. understand the budget. 2. work with someone who will work to your budget. 3. have a very good strategic finance person on your side.
Mike Mortlock's gold nugget: "Make sure the contract is reviewed!" Having an firm understanding of all of the important elements is so valuable for those who are building and renovating.
Show notes: https://www.propertytrio.com.au/2024/05/27/home-building-and-development-project-perils/