Ladies laying foundations

Did you know that women are two and half times more likely to live in poverty in their old age than men? By 2019 on average, women will have half the amount of superannuation than men have, and 40% of women over 50 will be single through choice, divorce or death of their partners.

As at February 2011, the gender pay gap in favour of men was 17.2%, based on average weekly ordinary earnings, and it increases dramatically when we look at different occupations. For instance, professional women are earning 32.4% less than their male counterparts, sales women are earning 39.4% less and community and personal service workers had a gap of 28.9%.

So what can we do about it? We all need to take control of our future and plan ahead for our retirement. Building a property portfolio is a great way to complement our superannuation.

Right now, I’m seeing many women not just buying houses but taking on property developments. My business, Property Bloom, project manages developments for others, and I’ve noticed a massive increase of women taking the next step into developing property.

For every male client I have three female clients. And these women are not afraid to take on a little risk. They are developing up to four properties from one. I think in general, women are in a hurry to build their property empires. This doesn’t mean women are rushing in; they are very astute and carry out extensive research. They can see that property development can boost their portfolios quickly. They are all extremely busy juggling work or their own business and raising children. I can totally relate to that, with two young boys of my own.

It is still very expensive to develop property in many capital cities around Australia. Land prices, building costs, labour and developer charges are high yet, block sizes are small. So Property Bloom focuses on the fast-growing Hunter Region of NSW for development projects.

There are many factors that will cause the Hunter Region to continue to grow. While the resource sector plays a big role in the local economy of these large regional towns, they are certainly not reliant on mining. There are many other sectors making the areas we develop in very diverse. With 133 major projects underway, there are lots of employment prospects. Population growth is also tracking well, with the town of Maitland the fastest-growing inland town in NSW. The Lower Hunter Regional Strategy, a 25-year plan for the region, has earmarked several suburbs as major residential hubs, with significant growth planned. There is a large amount of investment being made in local infrastructure projects such as the Hunter Expressway, a $1.8 billion freeway link that is currently under construction. The cherry on the top is that it is only a two-hour drive from Sydney.

The land in the Hunter is affordable and the long-term growth trends are over 10% in the towns we develop in, with rental markets tight. The area is perfect for investing and developing.

Let’s take a look my client Angela’s three-villa development project. I love Angela’s attitude, she’s an avid property investor, mother of two children and working full time. When I found a large piece of land, just under 2,000 square metres in a growing suburb of the Hunter, I thought it may be too large a project for her. Angela’s budget allowed for a three-villa project; however this land was large enough to build six. So I came up with a plan to subdivide the land and get development approval for three villas on both lots. Then Angela could sell off one of the lots with development approval in place.

Land cost 1900sqm: $265,000

Stamp duty, legal fees, survey: $2,500 (she will save on stamp duty under NSW Builder’s Bonus scheme)

Works for a two-lot Torrens Title subdivision: $30,000

Total: $297,500

Net price after selling DA approved lot @ $180,000 (includes selling costs): $117,500

Design costs to obtain development approval and construction certificate for villas: $15,000

Estimated build cost for three villas: $680,000

Contingency: $10,000

Total cost: $822,500

Estimated end value of each three-bed villa @ $350,000 each x 3 : $1,050,000

Estimated equity to be created (equity less cost): $234,500

The rent on three villas will give a 7% to 8% gross yield. So this will be a great development for Angela. She can choose to use the equity we create to pay down personal debt or for her next investment or development.

Using a project manager to handle your development means you are handing over all the detail to someone with the experience needed to successfully manage your investment. Some of the responsibilities of a project manager include:

• Source development sites
• Run feasibility reports
• Brief architects and designers, interpret plans, estimate costs
• consult with architects, engineers and other technical workers to make sure that design intentions are met
• plan construction methods and procedures
• coordinate the supply of labour and materials
• direct site managers and subcontractors to make sure standards of building performance, quality, cost schedules and safety are maintained
• study building contract documents and negotiate with building owners and subcontractors
• control preparation of cost estimates and budgets
• make sure that building regulations, standards and by-laws are enforced in building operations
• negotiate discounts
• assist in finding tenants

Jo Chivers is director of Property Bloom, which manages property development.