Building A Housing Project...

[cornishcarlos]

Ok, not a house project but a housing project..

Does anyone have any experience in developing a housing project, small scale.

We have 6 rai of land on the main highway and thinking about a 3 stage development.

The usual road front 3 story shop houses (x16) plus a nice complex of 2 and 1 bedroom houses behind (approx 40)

Basically, your stock standard housing project.. There is a need for housing in this area, only a couple other people have done this (just the road front 3 story shop houses) and they are all sold out immediately.

The costing looks reasonable and the market seems to be there, we are still researching but our land is cleared and ready to go..

Anyone like to advise or comment... Negative or positive, everything helps

[Crossy]

No experience of building a project, but there are some useful government plans available here http://www.dpt.go.th/download/PW/house_model/framehome.html includes several shophouse designs.

[thaicbr]

Ok, not a house project but a housing project..

Does anyone have any experience in developing a housing project, small scale.

We have 6 rai of land on the main highway and thinking about a 3 stage development.

The usual road front 3 story shop houses (x16) plus a nice complex of 2 and 1 bedroom houses behind (approx 40)

Basically, your stock standard housing project.. There is a need for housing in this area, only a couple other people have done this (just the road front 3 story shop houses) and they are all sold out immediately.

The costing looks reasonable and the market seems to be there, we are still researching but our land is cleared and ready to go..

Anyone like to advise or comment... Negative or positive, everything helps

Find a reliable builder. Look at his work and ensure that he meets your specifications. I think you are going to have to incorporate a Thai company and have insurance. Maybe better to find a local developer and go in together. I imagine the paperwork will be confusing.

[cornishcarlos]

We do have a local guy here who has done 1 shop house project and is on his 2nd.

He also owns a building suppliers and has the guys to do the job.

I think it might be best to go in with him ! Always a risk but got to take a gamble to get anywhere these days.

[bbradsby]

We do have a local guy here who has done 1 shop house project and is on his 2nd.

He also owns a building suppliers and has the guys to do the job.

I think it might be best to go in with him ! Always a risk but got to take a gamble to get anywhere these days.

Where is your site?

With a local who is both the builder AND the materials supplier, your funds are at more risk since he has no incentive to get you the best price on materials - a huge proportion of construction cost in Thailand since labor is so cheap. LEt him possibly build the project, but make him compete on materials pricing with other vendors, based on a materials take-off/bill of materials.

You should get a professional project manager to manage the whole design & construction process, and protect you from getting fleeced.

[mccw]

Have an engineer / quantative surveyor look over your plans and break it all down if to materials costs and stages so you know what to expect budget wise when, at what point and then you can tell your not getting fleeced; can also clear stage payments with the builder at what points. If you know this before hand then you can calculate labour to material costs and profit margins, so you know where you stand before start negotiate. Also it means this builder with his own supply's can be a good thing because he will be getting the materials at cost so if your surveyour quotes a price based of market price and you know he's getting cost price then you should be able to negotiate a good deal with him for total since he has a higher margin than another builder or protect manager who needs to pay full price for everything plus his %. The builder can also be the PM in this case so saving that % also. The engineer can just do sight visits at the key stages to ensure plans are stuck to/ foundations deep enough, structurally sound etc. A lot of that importance depends on how high/ how much weight your putting down. If basic and your confident in the builder then maybe you can cut that cost out too. Insurance wise I don't know; but it looks like the moo baans just factor in a bit of fixing along the way as an expense of the process; I'd be surprised if there was any insurance. Best to just make sure it gets built right in the first place. How long a warranty you provide contractually on the new props is something to think about.

[mccw]

Find the engineer separately from the builder obviously and don't say who it is your thinking to use until plenty after you've received the initial reports

[mccw]

I could well be wrong about the insurance. I started looking in to this myself but didn't get as far as the insurance stage. Be interested anyone experience or know about what the laws are regarding where responsibilities lie and for what, etc

What would be called public liabilities insurance in UK same for Thailand? Seems thai generally doesn't bother with these things? Work or visit at your own risk. Other wise I doubt you'd see workers in flip flops and welding with out Saftey gear etc

Cheers

[cornishcarlos]

Hi Mccw,

Thanks for the input.

The guy we are thinking of using is not so much a building materials supplier but more a hardware store owner.

His wife runs that and he concentrates on small developments for himself. He also does bore holes etc.

We have given it some thought and perhaps the best way to go would be to offer him half, if he finances initial costs and does everything through his company. He knows more people and has a good rep for his building projects, plus the bank are happy to loan him funds with no questions asked due to his long working relationship with them.

He also has 2 structural engineers that he uses, both linked to local governors which reduces any delays in permissions !!

I have sen the plans he gets drawn up by his surveyor and the work he is having done now, as far as I can see he is the most professional in the area.

We will need to sit down and discuss everything with him but this way we should get a good result without too much liability...

If he will go for a 50% split

Insurance ?? Will ask him about that...

[bbradsby]

You're more at-risk with each piece of the project you hand over to one party - ownership/funding liaising/expertise/management & oversight of design & construction! At some point, a tipping point is reached, and he controls the entire business endeavor. Whose best interests do you suppose get covered first at that point? You're putting all your golden eggs in his basket, and theres nothing contractually in-place to keep him honest.

You, as a layperson, need a professional builder - but to adequately protect your interests, you really must have an independent set of eyes on everything, from the consultants' selection & drawings; phasing, budgeting & scheduling; the spec'd materials; and the actual labor and materials that show up onsite. This is where a CM as owner's agent may be the best fit for your needs.

[cornishcarlos]

He can't transfer land parcels to anyone !

We own the land..

Therefore, it is in his interest as well as ours to stick to budget, timelines and standards.

One thing you must realise, in small communities, even an independent set of eyes still knows everyone and to get someone from outside will just annoy everyone else involved.

If he is backing it financially then what do we have to lose ?

A contract can be drawn up to specify certain criteria before completion and transfer !

Maybe I am way of the mark..

[mccw]

He can't transfer land parcels to anyone !

We own the land..

Therefore, it is in his interest as well as ours to stick to budget, timelines and standards.

One thing you must realise, in small communities, even an independent set of eyes still knows everyone and to get someone from outside will just annoy everyone else involved.

If he is backing it financially then what do we have to lose ?

A contract can be drawn up to specify certain criteria before completion and transfer !

Maybe I am way of the mark..

I really dont advise it, But If your determinated to do it this way then a few things can still be done to minimise your potential problems.

- contractually 1) - fix a price for what it will cost and state any over run to come out of his share of the profits.

2 ) fix who pays what when, ie stages. I suggest he pays the first half or go halts along the way. certainly don't pay it all up front.

3) clear exactly how the profits are shared and at what point. Ie after each stage is completed.

The problem is he has opportunity and motivation to cut corners to maximise his profit from the construction. Your gambling that he'll value his reputation in the local more than the money. Hmmm tough call? Most small jobs work like this but on millions of bht? He can move province and start again if the profit is big enough, and something went wrong a year or two later; might not happen, but you as the land own still with maybe phase 2 or 3 on the way would be left facing the rath of phase one while unable to sell the rest but builder man can just bugger off.

Chok dee

[mccw]

Have you talked to the bank about funding deals for purchasers?

Many housing projects and condos seem to offer deals direct from one bank like its almost guaranteed if the purchasers thai with at least a minimal joint income.

I didn't get this far but would be most interested to hear your experience.

Cheers

[cornishcarlos]

Nothing is decided at this stage, just trying to work out the best way to go.

If we did go with him on a 50/50 deal, I would want him to fund stage 1 (roughly same cost as the land) and we split the proceeds at each stage. He is not the builder, he uses a team for all his projects. Therefore he does work hard to get the best deals on materials but also keeps an eye on standards. I have talked with him about his current projects and can see he genuinely wants to build good value housing.

We could do it all on our own I guess, profits would be higher but so would the risks. I think for the 1st time, it would be better to have someone guide us through it all.. We shall see.. Will sit down with him again at the end of this month and chat again.

Thanks for the input from you all. Much appreciated

[mccw]

How's it coming along?

[Khun Jean]

You could let him do everything, from design, build and sales.

'He' has all the knowledge and connections. With all of that he can do little if there is no land available.

And in a small community land on good locations is scarce.

I would just sell the land with a good premium. No headaches.