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Full time developer timelines

Discussion in 'Development' started by AdamPineapples, 6th Dec, 2015.

  1. AdamPineapples

    AdamPineapples Well-Known Member

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    Hi all, just wanted to reach out to some full time developers.

    I was wondering about the timeline of a development.
    How long does it take from bought to plans to permits/DA to build to being sold. How long does it all take on average. I've people getting it all done from 6 to 8 months. Then other people say it took them 4 or 5 years because the council permits took awhile to go through.

    Along with that is it possible for a developer to do more than one project at once?
     
  2. Leo2413

    Leo2413 Well-Known Member Premium Member

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    I find 6-8 months from bought to build to sold very unlikely to be the norm. Nothing is impossible but I find it improbable, especially to be the norm. Generally I have found anywhere from 12-18 months, of course depending on what you are building and how smooth the process goes.
     
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  3. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    In an ideal world it would work like this
    - 2-3mths concept and design
    - 2-3mths council
    - 6-12mths construction

    So allow 12-18mths.

    If you have 2 projects it would be nice to be constructing whilst the other is doing design and council but so far I've found it hard to stagger projects.

    Occasionally you get some real breaks in the development world. I have a project at the moment that I did concept and design and my DA was approved before settlement so will be going to site within 4 weeks of owning. So sometimes with a long settlement and an easy concept you can get ahead but it's rare.

    The other time saver is buying something with plans and permits which comes around more often in Melbourne than in Perth.
     
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  4. Scott No Mates

    Scott No Mates Well-Known Member

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    The other alternative is buying something with a DA in place. Negotiate for delayed settlement and access during settlement so you can get out to tender and finalise the cc so you can hit the ground running day 1. This can cut out the time line uncertainty of achieving DA and all you're concerned about is construction and sales.

    Then you can start project 2 from scratch.
     
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  5. Leo2413

    Leo2413 Well-Known Member Premium Member

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    @Scott No Mates just gotta make sure the DAs not a dud and something that can actually get you your profit margin. ..I've seen shocka DAs..
     
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  6. Scott No Mates

    Scott No Mates Well-Known Member

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    @Leo2413 also that the costs of achieving a DA yourself are outweighed by the premium paid for buying a ready to go site (also considering loss of continuity of existing trades, bringing forward cash flows, holding costs etc).
     
    Last edited: 7th Dec, 2015
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  7. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Great point. Also it's much easier to miss a negative aspect in a DA when buying a DA approved site since you had nothing to do with it so it really needs a forensic look over to go over everything with a fine tooth comb especially the designs and engineering.
     
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  8. MTR

    MTR Well-Known Member Premium Member

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    Another option to save time and make money would be to put together a DA and on sell it, saves 9-12 months building. These can be a nice money earner and quick turn around.
    Just make sure you get the design right and enough fat in it for prospective buyer.

    MTR:)
     
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  9. LifesGood

    LifesGood Home Building & Development Consultant Business Member

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    Hey MTR, I would have thought that a savvy buyer would find out what you paid and would then struggle to see value in paying a heap more just because of the DA? The result you made on yours however was amazing!

    When doing a feaso, how can you put a value on what a DA is worth? And also after getting your DA, how will the additional "markup" you put on the land affect bank vals for the new purchaser?
     
  10. MTR

    MTR Well-Known Member Premium Member

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    this strategy can work well in Melb and Syd market, I don't know whether it would work in Perth, I never see properties with DA in place for sale?

    Builders/buyers are prepared to buy with DA because they save time perhaps as much as 9 months, risk is reduced as permit approved.

    Then it comes down to value, how much profit/fat is in it for the buyer 20/30% is perhaps the sweet spot. If it does not tick these boxes no one will buy it.

    I don't understand how bank value properties with DA, perhaps land value per lot increasing overall value?

    mtr
     
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  11. wylie

    wylie Moderator Staff Member

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    Dumb question alert... :p

    If we get our DA through, we will get ballpark quotes (I have one ballpark quote already from a builder who I sent the DA plans to). We then will work out whether we do the build or sell the block with the DA. I'm flip-flopping daily on "Do we want the hassle and the risk that will be required, plus the borrowing, to make some profit?" (what if we lose money?) against "Do we just sell, make some profit, minimise our risk, choose to give up potential profit, but no need to sell a house or borrower any more?"

    A developer friend looked at our figures, punched them into his "bible" spreadsheet and said he thought the risk involved for us as newbies was too high for the profit he got from out numbers in his spreadsheet.

    If we think we can do the build, what happens next? Do we get someone to turn the DA plans into something that can be quoted accurately? Is this a BA? Is this where every light switch, every power point, light is marked so it can be quoted?

    Our town planner has arranged (and we have paid for) all the things required, engineer, acoustic engineer, landscape design, etc and he did say if it gets approved, he will sit down and go through what happens next.

    I'm guessing the building designer who did up the plans for the DA is the logical person to continue with in this regard?

    I'm guessing we can get another builder or two to give us a ballpark quote from the DA plan but to get accurate quotes, we need more detail?
     
  12. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Most builders will be able to give you a quote based on the DA but it wont be as 'accurate' until they have the construction document approved, eg CC or BA. Also there will always be 'Provisional Sum' items for things they are not 100% sure of until construction starts eg excavation, footings, ect (mostly related to the initial site works. Builders will have an allowance for the PS items which may turn out to be less or more in which case you would have to folk out the difference. But generally you should be able to get a very good idea of the build cost from their tender based on the construction document.
     
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  13. Be Developer

    Be Developer Property Developer Business Member

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    @AdamPineapples

    IF everything goes according to plans:

    Allow up to;

    6 Months For DA/TP Approval
    2 months for finance, Valuation, builders quote, Home Owners warranty, etc
    8 months for construction
    2 months for subdivision, Bank, Title issue etc.

    All in all allow 12-18 months for Complete Development process for duplex /Muti-Unit project.


    For stock standard H &L Package, Anywhere 8-14 months.

    @wylie
     
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  14. AdamPineapples

    AdamPineapples Well-Known Member

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    Yeah I thought 6 months was a bit of a pipedream haha

    What do you mean by bad DA's? Can something unexpected still happen if their is approval?

    Overall what's the best way to go about it? Buy something with plans and DA and a longer settlement and hit the ground running, or doing it all from scratch? I mean I'm assuming their would be some kind of premium if you buy something with a DA. How does this effect the end profit margin?

    I like @MTR approach. Especially for someone with limited financials. I'm assuming you could have tenants in the existing house while you get the DA permits plans together?
    My question would be the same? What kind of mark up would you charge? How would you sell it and who to?

    Another question. I hear stories about it taking years to get approval from the council.
    Is this because they didn't do their research on what that petticoat council/neighborhood is like? Are they unlucky, or are they making mistakes along the way? Or are they just attempting high risk developments in under supplied areas?
     
  15. MTR

    MTR Well-Known Member Premium Member

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    I am not an expert in this area, still learning, but I guess getting your hands dirty is how you learn.

    Bad/inferior DA - it wont sell because the plans/designs are poor or wrong product for area
    Not enough money/proft for the builder/buyer so this is about doing homework, sales, build costs.

    Value of DA is dependent on what market will pay, agents should be able to give you some idea on what each lot sells for in the area/suburb and look at comparable sales.

    use lo doc as a short term solution and you can too if you meet criteria. This year I will have second year financials in my business, but I imagine I will continue to use a mixture whatever works. I have also been selling so have available cash to fund projects. I can see finance tightening.

    No idea why DA could take years, could be many reasons ??

    I don't do high risk projects, I want to sleep at night. I think they have all been low risk, low entry level and smallish projects. Just about doing numbers on best and worse case scenario.
    As developers we have no control over the market, if it turns this also needs to be considered, means you may not be able to sell, can you hold?? will it be cash flow positive ??

    MTR:)
     
  16. Blacky

    Blacky Well-Known Member

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    A lot can still go wrong after Development approvals (DA). Probably the biggest one being finance approval.

    The best way to go about it? how long is a piece of string? Same question.

    The best way to go about it will depend on your own personal situation/circumstance and the site itself.
    Some blocks with DA may be being sold as the developer can't get the numbers to work. Or maybe they can't get finance. You need to do your own DD.

    Councils can be fickle things. Some projects will fly straight through (i.e. WM project which had DA prior to settlement). Others will take months/years. Generally the larger the project the longer it will take.

    If you are looking at doing your first development take heed. EVERYTHING will take longer than you think. And EVERYTHING will cost more than you think.
    If you are aiming for a 6-8month turnaround... double it, then add in a 50% contingency... and you might be close.

    Blacky

    As a side - read my previous thread on SS. Life - its not all beer and skittles - Somersoft Property Investment Forums
     
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  17. albanga

    albanga Well-Known Member

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    @Westminster 2-3months council, you must have connections! In my experience it takes council 2-3 months to work out how to open an envelope.

    Me personally never been a fan of the idea of getting DA and then on-selling the entire property. I would prefer to get DA for one at the back, subdividide and then sell the existing home and land as seperate parcels. I think there is more fat in it that way for not to much extra work.
     
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  18. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Ha ! :p. In theory WA Council's have 60 days to approve or refuse. If they don't approve it within 60 days then it's a 'deemed refusal' and you can choose to go to SAT or just ask the council to pull their finger out.
    One council in WA completely flouts this 60 day timeline and won't even assign a townplanner to the submission until 60 days is up but then work quite fast.
    One council has a preDA requisite that multidwelling (apartments) go through a Design Excellence process which can add another 3mths to the timeline.
    On the useful flipside another council will take less than 30 days to approve - now they are my favourite :D
     
  19. OC1

    OC1 Well-Known Member

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    Don't forget the "I don't know what the hell i'm doing" factor. ;)
     
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  20. AdamPineapples

    AdamPineapples Well-Known Member

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    @Blacky I started reading your thread. Did it all work out? How hard was it to develop from another country?

    @MTR I've also seen what I assume are loud and house packages? Or 'OTP'?
    It was an old standing house with a real estate board at the front advertising 4 units? Stating the one was already sold? I assume they would build once they were all sold?

    Does anyone know what kind of margin that would hold? Or if it is even hard to sell?
    Seems like it would be hard to sell. Why would someone want to buy a house if they not only have to wait for it to be built but they have to wait for the other units to be sold?