Watch Out For Dodgy Builders
There is a small development just down the road from my office in North Melbourne.
Now, this development here started probably just two years ago, and basically, the site sat here for 12 months and nothing has happened then all of a sudden they come along and they started doing work here.
It’s a good example of a developer going broke. Quite often a lot of people say to me, “How do I know who I’m dealing with when property investing? “How do I know I’ve got a good developer or a good builder? How do I know they’re financially solid?” And that’s one of the biggest problems that most people have when it comes to property and property investing.
Sadly the end result is you could have a project sitting here that lays dormant, you’ve got your deposits tied away in the project, the developer has sunset clauses and things like that which can get triggered depending on a two to five-year window. So if you don’t know who the developer is or you don’t know who the builder is or you don’t know their financial background then my advice is to be really, really careful.
The advantage for people working with us when investing in property is that we have a select group of three or four builders that we use in the whole of Melbourne and also up in Brisbane. We know their background, we know their financials, we know they’re a solid company, we know they’re going to deliver on a project and we won’t end up with a half-built project. This is a problem for property investors in Melbourne and this is what costs people money in property.
This is how developers tip over and go under through poor financial management. It reminds me of a plumber who came and see me about five years ago. He got stuck with some dodgy little developer out the other side of Melbourne in the eastern suburbs. He bought off the plan into a townhouse development, the developer went broker and he lost $100,000 over two years. He sold out and lost $100,000.
So folks just a little lesson here is to be careful who you deal with, make sure you know that they got good solid credentials, they’re a well-established builder, they’ve got a good reputation, they have the runs on the board otherwise you could end up with a bit of a lemon property. Before you know it your money’s stuck and you could be in a bit of trouble.
If you need some help and you want to know who to deal with, you know who to talk to come and see us. Book a strategy call and see what’s possible for you.