The property development process: How much time does each stage take?
During our project management we find that there is quite a large variation in the amount of time required at each stage of the property development process.
I thought I'd share with you a brief overview of each phase of a development and indicate the time needed.
- Site selection
This can be very time consuming looking at different sites and running feasibilities on each of them. Once you find a good site, then there is no time to waste in securing it and taking it off the market.
Firm and professional negotiation is needed and you should manage the agent during this stage. Make sure they've raised the sales advise quickly and contracts are received and reviewed by your solicitor. Request terms such as a longer settlement period and permission to lodge your development application (DA) during this time.
You may be able to purchase under an option agreement which can literally buy you time but discuss this in detail with your solicitor so you understand how it works. We don't normally use an option to buy as land developers and vendors mostly want to see a firm purchases.
Good sites will sell quickly to others and sometime more complicated purchasing strategies can kill a deal. Once you have an offer accepted, be ready to move to exchange on the land quickly.
- Design and Development Application preparation
Again, time is of the essence as you want to get as much work done before you settle on the land and interest holding costs start kicking in. Work closely with your architect so that they can finalise designs fast.
- DA processing
This is a chance to take a deep breath, regroup and begin to set your focus on the construction phase. Whilst you'll have a few weeks up your sleeve here, you still need to stay in touch with the town planner assigned to your DA but don't be too pushy. Make sure that if council does request more details, you provide them very quickly as the processing 'clock' will stop while they are waiting on your response.
- Construction Certificate
Using a private certifier to approve construction certificate plans and issue occupation certificates can save you valuable time compared to leaving it all with council.
- Unconditional construction finance
Move like a speeding bullet to get the consents and stamped plans to your finance broker/bank along with the personal information and documents they will need to finalise your construction loan and give you unconditional approval.
Time can be wasted in this phase with banks waiting on necessary docs or not being given all the information they need. Chase the bank for the Letter to Commence construction that your builder needs before they can commence work.
- Building phase
An efficient builder, they will generally spend a couple of weeks after receiving the letter to commence from your bank, preparing your site file which involves placing orders with their suppliers and allocating resources for your project. This is important planning time for the builder so when construction starts, there is no waiting around for delivery of materials to site. Ask for a date that your site will be cut and be available to attend.
The site preparation phase is where some issues can arise and you'll need to be aware and give direction to your builder. As the build phase continues, work closely with the site supervisor and provide any details or deal with any issues as they arise.
Property Bloom spends a lot of time with our builder supporting them and to ensure a smooth process. We hold a weekly work-in-progress meeting and inspect each site once a week or more depending on the complexity of the stage we are in.
- Final inspections and Occupation Certificate
It's important to spend the time here ensuring you are happy with the finishes, booking in the final certifier inspections and making sure they have all the documentation they require to issue final approvals.
Manage your bank so that the builder's final account is paid quickly (after you are happy all works are complete). We have a system where we are able to start our tenant procurement during the practical completion and Handover period so that as soon as the occupation certificates are issued, approved tenants can move in.
This phase can draw out with the bank needing to send a valuer to ensure the project is complete before they release funds. If the valuer cannot get access or in touch with he builder then there are delays. The builder will not handover the keys until the final payment is in their account.
It's really a full time job project managing the ebbs and flow of a development project. It's not always a race against the clock but a balance between spending the right amount of time to ensure nothing is missed and of course, to enjoy the journey.
As Gold Meir once said: "I must govern the clock, not be governed by it."
