Is your builder debt free?
Why is this so important?
In Brisbane’s Northern Corridor demand for investment property land continues to exceed supply. I often have to buy land 5-6 months before it is out of the titles office.
This week’s question is, “What happens if the cost of building and material increases during this time?”
The standard building specification document used by members of the Queensland Master Builders has 11 pages. There are 12 separate clauses where a builder can charge the owner more than the contract price.
This means that the house could end up costing more than anticipated. This does not happen with my builder. I do not know if any other builder in Queensland can make this claim but our builder is debt free.
This is an ideal situation because our suppliers know they will be paid. We are able to lock in prices of materials in advance, due to our volume. This means that our build prices are fixed with no variation.
Our clients generally save about $10,000 in stamp duty as we do separate land and build contracts and only pay stamp duty on the land. Our clients also buy the land direct from the developer so there are no agents’ commissions.
Events such as weather delays are our problem, not our clients.
Time is another factor that can cause the cost of building to blow out.
We allow 4 months to complete a home where it is not unusual for some builders to take 12 months or longer. While the house is being built, the owner is paying interest on the land and builder’s drawdowns.
How can we do it in four months?
Our builder is debt free. It is normal for a builder to pour the slab then invoice the client. The client takes the invoice to their bank and an inspector then verifies the poured slab. The inspector then reports back to the Bank who then pays the builder 3 weeks later. The builder does not do the next stage until paid for first stage etc. This causes multiple delays.
As our builder is debt free, we start a job, have a seamless flow of tradesman and finish the house within 160 days. This saves our clients a fortune in interest.
Other advantages of are in the quality of our tradesmen. Our tradesmen know that they will be paid every Friday without fail. Consequently, we have a waiting list of tradies wanting to work for us.
Sounds like a dream, doesn’t it? Yet, this is our experience again and again with the building of our client’s investment properties in Brisbane’s Northern Corridor.
Steve Taylor
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At the helm of Steve Taylor & Partners, Steve has been delivering expert advice and product knowledge to clients for over 30 years. We provide individuals, couples and families with the right strategies to create wealth and change their lives with solid bricks and mortar.
DISCLAIMER
Steve Taylor & Partners blog is opinion and not advice. Readers should seek their own professional advice on the above subject. The figures stated in this article were accurate at the time of publication. For up to date figures, please contact our office.
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