aenspire delivering developmentprofit.com

I recently took the mickey out of developers selling cars….. I mean houses. I have earned the right to as I have been in those discussions and if anyone cares to remember I publicly launched and advertised the most elaborate incentive package the New Zealand market ever had. It went something like this.

10k for furniture
Mortgage paid for six months
5k holiday.

But of course our purchase price covered it. I did this to explain to a ‘select’ group of people, what a complete waste of time these incentives are. You want it sold, just reduce the price. Buyers are not that thick, to think they are getting a free car -I hope. Banks don’t really want you to load up your mortgage with a vehicle. Valuers won’t take the bait. Timeshare tactics are so 1985.

Simply deduct the developers cost of the car from the purchase price to deduce the actual market value and offer them that for the house (assuming that is not still above market value). Then buy a used car. Here is some analysis. You are welcome!

Or am I misrepresenting the marketing trick of the century and doing these agents and developers a gross disservice?

When I started at the ‘company’ we were finishing off about 30 terrace homes on contract build, when I left we had almost completed another 120 terraces and apartments with another 40 ready to build vertical when the market was to pick up. That’s the Northcote story.

Well actually I had another Northcote story. Once upon a time, at HNZ, I was the person responsible for trying to find a PPP development partner for the entire precinct. The issue was a big pipe was required and no one had the cash. And we literally couldn’t give the opportunity away.

Fast forward over a decade and Northcote sure has pumped the homes in, courtesy of HLC and then KO and the rest of us who brought sites and dabbled with kiwibuild.

Learnings:

Design review panels (5 of them) and RC took 13 months for us on the apartments. That was red tape gone crazy. And council and KO not seeing eye to eye. What a cluster. And what a massive risk when the market changes abruptly. At least KO were favorable to renegotiate with, albeit the boat missed on the market and the govt first home equity share programmme.

Can sell a townhouse there all day long every day.

Better to price realistic on day one, especially if profit still results, rather than follow a market down -should one be allowed to do so.

Build to hold and rent out is a great downmarket strategy -should one be allowed to do so.

Put the joint owned access way in before going vertical. Yep it might need some repairs but makes everyones life on site easier.

Top floor apartments are the bomb for so many reasons. Sacrifice for a few stairs.

A million other things, you will just have to engage Xpect to find out!

From the book:

Artist’s Impression

It used to be an actual artist would paint or draw an image in perspective of the development based on the plans that the architect would provide. Nowadays every architect has software that will generate a three dimensional render. Except for large firms with dedicated staff, the quality of these renders typically does not compare to firms who specialise in producing photo realistic renders. The very best ‘artists’ create images that look like professionally staged photographs — especially interior shots. The artist’s impression renderings are crucial to help sell your product so put your best foot forward. The old ‘a picture tells a thousand words’ is never truer. To get an artist’s rendering right takes some management as there is a number of issues to consider:

Exterior

• Prepare wireframe or quick block renders first so you can choose the best view angle for the render. Don’t leave it to the architect or artist to choose this and don’t proceed with the render until you have agreed the best angle. For a subdivision you will probably want to show a render of a streetscape profiling a couple of different house types close up. You may also consider doing a perspective of the entire development from above. If you are selling sections, without any house design, you still will want to evoke the emotion of what the development could look like when houses are actually built. By focusing on amenities, like a park, you can leave the houses in the background so you don’t have to worry about detail you haven’t actually designed.
• Include your agent as the perspective proceeds. Have them to comment on sales emotions invoked by the render.
• Cars, are they modern, current and match the target market?
• Do the people shown represent the aspirations of your potential buyer profile? Are there enough or too many? What are they wearing? What ethnicity are they? Are there any double ups (where the artist has cut and pasted a clone in different parts of the picture). Consider if you need people in the perspective as it is difficult to make people look realistic.
• Lighting. Is this to be a day shot or a night shot? Consider what time of day to get the best effect from sun shading for your development.
• What materials and colours has the artist used? Are they compatible with what you have planning permission for and what the architect has specified? Artist’s perspectives are typically done before the architect has completed their specification detail. However, the rendering is what buyers believe they are getting, so in essence the artist’s impression can trump the architect’s plans if there is a discrepancy. You may find yourself selecting construction materials as part of the artist’s perspective process rather than during the architectural developed design process.
• Use glazing to add interest by adding reflections or depth with furniture and people behind the windows.

Interior

• Choose the wireframe views before it is fully rendered. If you are on a tight budget consider just a kitchen and dining render. Other interior renders can include bathroom, living, bedroom, a combination view or even an angle from standing on a deck if the outlook from your development is a key selling feature.
• Are you going to have a view superimposed on shots where there is a window (requiring drone photography onsite)?
• Does the furniture and interior decoration match your likely buyer profiles? Be careful not to clutter small spaces so the effect of spaciousness is lost.
• Once again be careful about materials and finishes — are you really providing full height glazing? A continuous splashback across the entire kitchen wall? Intricately detailed lattice work on the stairs? A custom made integrated joinery unit?
• People are difficult to include without detracting from the shot, especially as they will be close up. Frame the render like a real life interior design photography shoot and be very selective on using people, if at all.

In the space of a decade the company delivered over 1000 homes at Hobsonville Point. I was there for about six and a half of those years. This project being the last completed under my watch as CEO.

A few things to note when doing large blocks (a superlot) of homes at the same time – 50 to 100 units.

1. Think boutique. They don’t all have to look the same. Small blocks designed to look like they evolved over time. Varied floor plans and aesthetics contribute not only to a more pleasing streetscape but it also comes in handy in softer markets to move unsold stock.

2. Think small. If you were designing your dream home, you would naturally focus on the external context – right? Where the sun hits, the view, the best outlook, outdoor living space etc. you would pay attention to every window- down to what you will see when looking from the kitchen sink. However when designing 100 of them, its very easy to focus inwards on the site plan-without explicitly addressing the context of each unit. But you must. The DM and designer needs to address external context on every single unit.

3. Think value. An end unit allows more windows- don’t waste that opportunity with a 2 beddie, when you can now enable a 3 bed. Pay attention to the joal- the landscaping, the bin enclosures etc (albeit always an argument of cost versus function versus look)- for many this is their front door. And when doing inclusionary zoning -Axis Series they called it at Hobby- where buyers enter a lottery to effectively win 200k of equity – don’t put those units in the best locations! You need to maximise value by placing the market rate units where they can command the highest price.

This was a circa 130 site project that I took over project and development management in Flat Bush. About half under house construction and the other half under design and civil work.

The original contractor operated a modular/panelisation factory. They went bankrupt and just prior to me joining 5 smaller builders each on their own contract were appointed. Most of the houses under or about to start construction were sold, so the clock was ticking to complete and get titles and ccc.

So every second Tuesday I would rock up to six different bank qs/contractor progress/drawdown meetings. 5 house builders and one civil contractor.

The houses were pretty much identical, but how each builder treated the plans, the contract, variations, the programme, their subbies, me and my assistant was completely different. Massive learning experience on that front- in perfect real world test conditions. There were two other projects I was delivering at the same time, so I had live data points on 7 different house builders and 2 different civil contractors.

This project had significant and complex negotiations to take place on various fronts to reach settlement day and 224c. Council, purchasers, other land owners, watercare- you name it. Through persistence and persistence and persistence and collaboration we got there.

A lesson: You can save tens, hundreds, thousands of thousands, maybe even millions, and a whole heap of heartache if you do this one simple task before you start construction, after you have indicated who you intend to award contract to but before signing. Sit yourself, the architect, the builder and their site QS down and go through the plans like a workshop. If the builder wants anything changed (talking details, not design) get the architect to do it. Clarify all the niggly details and identify mistakes early. Nothing more expensive than blaming the plans once the project is coming out of the ground.

An ancedote: when thrusting under the main road to build the neighbors 800m long sewage pipe through their site (one of those negotiations!) on the first day the drill hit metal, deep below the road. Solid metal. Bang. A previous civil roading contractor had left the/a temporary steel trench protection sheilds underground! Ouch. Our civil contractor was a legend though and he could sort anything out.