This is going to happen for a few reasons;

1. The Australian dollar is becoming weaker. This directly raises the cost of all imported materials which means all the cheaper products in particular from China are becoming more expensive to buy.
2. The builders are still busy building. This means a less competitive market place for people wanting homes built. Why would a builder discount their services to win your job if they know they can go down the road for a similar project with better profit!
3. New regulations with regard to sustainable environment initiatives, bush fire safety, on-site safety during construction and insurance is all going to cost you more. So be it……we all want positive outcomes for the environment and safety even if it costs a little more to comply with regulations.

If you want a new home in 2016 then you need to expect a rise of about 2.5% build costs from 2015. Therefore a $200k home in 2015 is now going to cost you $205k. Small rise in comparison to the overall cost of a new home.

Greenify Consulting helps people wanting to build a new home achieve their dream by maximising their cost savings not only by clever design for the initial build but also with reducing the builders margins so profit remains in your pocket. Also owners will also benefit from ongoing cost savings over the life of the building with sustainable energy efficient and passive design initiatives.

Contact Greenify Consulting for a friendly chat about your project.

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When interest rates are at the lowest levels ever then of course this stimulates the economy. People like to use cheap money to invest in property or update their existing home.

Building approvals also at an all-time high this means the construction workforce is in over-load.

Because the construction industry was in such decline for so many years many tradies re-trained into different areas and there were no apprentices coming through the ranks. Tafe’s were even closing down courses.

Now just as predicted we have a construction boom. Unfortunately there are not many tradies left to do the work so therefore you wait to build your new home or you pay higher prices to jump the queue.

Even though there is great competition amongst builders to win your contract the profit margins will start to creep up. The cost of the individual tradies will also creep up. Before you realise it the saving on the interest rate payments is overshadowed by the additional  building in the first place. It is a vicious cycle.

Buy land….now! Build later when things settle down. Pay off your land as quickly as possible while interest is cheap. You will even see an appreciation in land costs over time.

This will also give you time to plan your new home properly. You can also save oney as possible to reduce the initial borrowing amount which will save you interest.

If you wait until the boom finishes you will also be able to get skilled tradies when you want them at a reasonable price.

No one is in a rush to go broke but sometimes you don’t realise when you are in a rush.

The post Building Homes During Construction Booms Costs You More appeared first on Greenify Consulting.

2014 has been a real turn around for both domestic and commercial builders. Demand is high for new homes so therefore  you guessed it…the price to build goes up.

Although competitive pricing amongst the project home builders has seen them all jostling for their fair share of the action they have also realised that price increases are not turning away clients.

Clients are realising a market that is ‘Hot’ so they can see their investments growing. This is increasing equity in their property so therefore owners have a few options…sit and wait for prices to increase more then sell..or…use the equity in the property to build another investment property, adding even further to the already stretched workforce..or..sit back and relax, take a chill pill and just enjoy the fact that your new home is increasing in value. Remeber …Try to pay it off as quickly as possible.

2015 is going to see an increase in building costs. Conservative estimates are pegging it at about 3.5% more to build a home. Others are warning about 5%-7% increases in cost. Mightn’t sound like much but in real dollar value a house that cost $300k in 2013-14 will now cost $315k. (estimate based on 5%)

There are a few economic features that are driving the increase….

1) the falling Aussie dollar making imported goods more expensive

2) the increased demand for new homes is stretching the current work force. Builders can pick their projects and name their price (within reason).

Now for something you probably didn’t know! the last 7 years has seen a real slowing of the building industry. Apprentice numbers have dropped considerably. Training institutions have dropped courses in the building trades because of lack of numbers. Existing tradesmen have sought other types of non-building-industry work just to maintain a steady income.

As a result we are seeing an increase in unskilled workers entering the workforce and then ‘upskilling on the job’ without formal tertiary qualifications. This can lead to a decrease in quality of workmanship.

Unscrupulous builders are taking advantage of this situation by employing low skilled labour to perform tradesman jobs at a reduced price. Unfortunately you as the client will get the bill for the full price regardless of quality.

Luckily for you as a client using a licensed builder you are protected by your state laws which protects you against faulty workmanship or defective materials for 6 years after completion.

If you are an owner builder and you emply a tradesman without qualifications or a license then you are taking on a big risk.

Owner builders can save big bucks by managing the building process themselves. Follow a few simple rules and reap the rewards. Ignore the simple rules and then you will suffer big time…guaranteed.

Greenify Consulting helps owner builders stay in control of their project by providing everything they need including costs of labour, materials and schedules.

With the cost of building increasing in 2015 then wouldn’t you like to know how much you are going to be up for?

Contact Matt at Greenify Consulting for a free appraisal of your project.

Here is an excerpt form a current client. Food for thought!

After a horrendous experience with a local builder we demolished the slab he allowed to be laid at our expense and looked into building with a builder again. We were gun shy and learned that they can pretty much do what they want if they choose and get away with it to our detriment.

Our consideration of owner building came about because of this and as we were now severely financially compromised between losing our $15K deposit, demolition, legal fees and holding costs. (currently in the equally horrid process of NACT, so I can’t comment on specifics) We then realised that as some builders have little clue and no morals, we decided with help from someone like Matt at Greenify Consulting we could do this and likely do it better and cheaper….well that was the hope

and we have!!!!!!!!

The builder laid the slab start of Dec 2013 but it was not according to plan so we demolished under Council order in July 2014. We broke ground on the new owner build on the 16th of September and we are all locked up with gyrockers finished and the tiler about to start.

So far we have done better than the original builder by far and as a bonus we have a bigger house without technical problems like the old slab had as even the termite barrier would not have worked even laid according to plan! The best thing is we have saved around $150K (on new size tender prices from other builders) all up and by sourcing items ourselves and have been able to upgraded from the basic provided ranges to mid to high end items.

We have built according to the plans with no dramas and with the help of Matt explaining the technical issues and order of when to do what (our biggest no idea) and giving a guide to prices of we should expect to pay…. off we went!

We have had the help of some local builders and tradies who witnessed the previous disaster of an attempt to build and felt for us. Together with people like Matt who gave unconditional support (weekends and after hours at times – ie when we were home and able to do things) it has actually been quiet easy and not a scary as we thought!
There are some awesome honest tradies and people out there – it restores your faith in humans after something like this happens to you! My hubby has project managed the construction side and I have done the ordering and paperwork. We are still running our business at the same time although it is suffering from the lack of attention and we have had to outsourced work and accounting to ensure our customers are happy until hubby gets back to work full time.

The post 2015 Cost to Build a New House appeared first on Greenify Consulting.

If you already have good equity in an existing home and you can use this as security then you will probably qualify for a loan to owner build.

Too many would-be owner builders I speak to are frustrated by the rules that govern their loan applications. Banks see owner builders as a risk..because they are a high risk.

My answer to owner builders is simple…..start small with what you can afford to build with the absolute minmal loan. If the loan is just for the land then you should be ok. If you need money to build the home then you may be in trouble.

Most owner builders I work with are already cashed up. The savings these owner builders realise is in the 100’s thousands. Too good to be true?…..no way! If you don’t have to contract a builder then the savings you make on your project stay in your pocket…not theirs.

OK so you’re not a builder….that is why you employ a building professional to help you manage your project. This is what a professional project manager such as Greenify Consulting does.

The cost associated with employing a project manager is very cost effective. Most projects cost around $4000 for complete project management services from start to finish.

For a free consultation then send me a quick email via my link below. I would be happy to discuss your project with you.

CONTACT

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The post Planning your building project appeared first on Greenify Consulting.

Banks have very good reasons for regarding owner builders as high risk because of the well documented history of failures.

Owner Builders generally don’t have construction experience and this leads to problems with design, scheduling trades, contracting tradesmen, quality of work and time management.

As a result homes that are built by owner builders are more expensive than first anticipated, of poor quality, slow to build  (mostly never finished) and finally poorly designed.

Greenify Consulting offers owner builders a system that removes the risks.

Using my system owner builders can now qualify for a loan equal to 80% LVR (Loan Value Ratio)

It gets better than this. Because you now don’t need to engage a builder then you will save the profit margin which is usually in the 20-30% of building cost.

Because you have saved 20-30% on the cost of the home then in fact the 80% LVR means 100% of the required amount to build your home.

The savings you make stay in YOUR pocket and not the builder.

The money saved can then go towards other things that you generally can’t afford at the time of building a home…such as new furniture or a car or better still paying off your mortgage quicker.

Also because you are already 20-30% ahead of all people building a new home contracted with a builder your mortgage is that much less already.

I know it sounds too good to be true …. there is a catch. To qualify for owner builder loans you still need to qualify for my system to work.

You will still need to have saved a deposit equal to 20% of the build cost of your home or combined house/land cost. This deposit needs to be based on the cost for a contract builder to build your home.

You will also need to have a fair degree of discipline in managing your financial affairs. Even though I provide systems that make this simple you will still need to use it….diligently!

You will also need to have proof of being able to satisfy lending institution guidelines for loan repayments.

Finally you will also need to abide by the rules governing my system. These are;

1. A fully itemised cost estimate of the build.
2. A detailed work schedule/program.
3. A fully developed design including structural, geotechnical and thermal performance.
4. A cash flow report for your project. This determines the draw downs for the loan.
5. Qualified, Registered and/or Licensed tradesmen to carry out works required by law.
6. Written agreements with all trades and suppliers confirming scope of labour and supply.
7. Regular progress inspections by qualified building surveyors/certifiers prior to payments being issued.
8. Regular monitoring of progress based on original program.

Greenify Consulting provides the system for all of the above and helps you stay in control of the process at all times.

Defaulting on any of the above may lead to funding being halted. As a result the lender may request that a licensed builder take over the construction to completion. This may lead to price gouging.

Because Greenify Consulting offers a service and does not base income on profit you can be in control of how much or how little I am involved in your project.

If you engage Greenify Consulting as a Project Manager for your project then on average I allow 1 hour per week for 26 weeks. That is equivalent to 26 hours at $150 per hour. This is a little under $4000 to help you manage your project. Considering a project builder charges 20-30% of the build cost to manage your project this works out as a considerable saving.

As an example a home costing $300k for a project builder includes a management fee of $60-90k. My fee is $4k. Go figure that out.

For a free consultation regarding your situation simply contact me and click the below link

CONTACT

The post Owner Builder Loans appeared first on Greenify Consulting.

I have had many clients come to me after unsuccessfully trying to get an owner builder loan from their bank or lending institution.

The bad news is that lenders regard owner builders as high risk as the finished home is used as the security whilst repaying the loan. Owner builders don’t have a good track record of finishing homes on time or budget. This leaves the lender without an asset to secure their financial interests in case you default on your repayments. Professional builders are under contract to complete the home for a fixed cost and reasonable time frame. The pros can still go broke though but that is another story.

The good news is that there are some Banks and Institutions that will lend to owner builders…….but they still require some convincing!

If you can prove to the lender that you have thoroughly planned your project and give them some real data for their securities people to review then you will be in a lot better position to secure your loan.

The even better good news is that in most cases 100% of your construction costs will be covered by your loan and not the standard 80%.

Yeah right! Don’t believe me then read on……….

It is widely known that Professional Builders work on a profit margin of around 30% to build your home. That is 70% actual build cost + 30% profit ( and also allows for stuff ups which usually are frequent)

If you get a loan with a bank it is common to secure a loan with 80% Loan to Value Ratio. That is you must have at least 20% of the total cost of your project covered out of your pocket.

Owner Builders can sometimes be slugged as high as 50% LVR. That is alright if you are cashed up.

The Banks quantity surveyor’s determine what your home is worth when completed BEFORE they lend the money. They work on current industry price guides and includes the builders margins.

So therefore if you can owner build your home for 30% less than current industry price and you have secured a loan on 80% LVR then you will have covered 100% of your build costs.

Confused? Look at this simple example;

Bill & Mary want to owner build their dream home. They have saved up $20k as a deposit for a loan. They already own their land.

They have had their plans to build approved and a builder has quoted them $100k to build it.

The bank will lend them 80% of the required amount to build their home. This equals an $80k loan with their 20% deposit. Easy done!

Now Bill & Mary decide to owner build. They recieve quotes from licenced tradesmen and do some great on-line bargaining for materials and fittings for their home.

The total cost they estimate is $70k to build their home. They prove this to the bank and the loan is approved…… but the loan is still approved for the $80k.

Bill and Mary build their home but it does cost them a little more than they estimated because they decided to put granite in the kitchen.

The final cost of their home is $80k…Win…. It is better than they originally planned….Win…. They only have $60k left to repay….Win… The bank values the home at $100k….Win!!!

I know this sounds too simple so therefore everyone should be doing it! Well owner building is not for everyone. See my earlier blogs on the subject.

The systems I use to help you manage your project are industry proven and simple.

If you want an owner builder loan then it is certain that you will need to convince your lender you know what you are on about. Planning! Ever heard of the 6 P’s ?

Proper Planning Prevents Piss Poor Performance!

Before you decide to owner build check out my website for heaps of free information that will bring control to your project.

If you are still having difficulty getting an owner builder loan then contact me and I will give you my best free advice.

Contact Me

The post How to get an Owner Builder Loan appeared first on Greenify Consulting.