Should She Do Owner Builder
On today’s episode,
Bernadette is going to be talking about renovating as an owner builder.
Listen to Episode 40: Should She Do Owner Builder
Podcast: Download (Duration: 18:48 — 19.05 MB)
- Live trainings in Sydney and Melbourne
- Updates on her Wynnum project in Brisbane
- Spent quality time with her Mum in Melbourne
- Student meet ups in Melbourne with Stephen
- Weekend with her oldest daughter, Hannah & Ed
- Bondi apartment project ready for sale
- Canberra St. property for Airbnb
- What is an owner builder and when is it relevant?
- Laws vary slightly from state to state
- The advantages and disadvantages of being an owner builder
- Responsibilities of being an owner builder
- What are the limitations of being an owner builder?
- How to utilise the owner builder process
00:40 - Our upcoming live event in Sydney and Brisbane
01:13 - Our Wynnum Project
03:10 - Time with Mum
03:31 - Melbourne student meet up
04:28 - Weekend with Hanna & Ed
05:17 - Bondi Reno Project
06:01 - Why would you do a project as an owner builder?
08:22 - Responsibilities of the owner builder
10:04 - The limitations
12:25 - The owner builder process
14:20 - More control over your project
16:39 - Early bird VIP tickets
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“If you're going to do this as an owner builder you need to have the capacity, you need to have the skills to be able to do it."
Well hello it's Bernadette back with another episode. And today I'm going to be talking about renovating as an owner builder.
I was asked a few questions about the whole owner builder recently and I decided it warranted an episode to clarify the details. Basically, what I'm going to be talking about is why you would renovate as an owner builder. What the advantages are and what the limitations are. And important to note, I have actually done this on a couple of projects and so I've got a bit of firsthand experience on the process.
But before I talk about that there's a couple of things that I need to do. And the first thing is to let you know that at the end of this episode I'm going to be sharing some details about our upcoming live event in Sydney and Brisbane, it will be happening towards the end of October. And I'm very excited about that I love doing the live events and I don't do them very much anymore. I'm really looking forward to it.
And also to fill you in on what I've been up to and in actual fact I've been everywhere in the last couple of weeks. I did a round trip, firstly, went to Brisbane and the main reason was to register the title for our newly created block of land on our Wynnum project which I have submitted that for registration and also to catch up with some students and progress the project a bit further.
I did lots of bits and pieces I needed to get a stone bench top for the vanity I found that a bit more challenging than usual because the recent changes in the law around the handling of composite stone and the health implications have actually meant that quite a few stonemasons have actually shut down their businesses.
I found that a bit challenging to find someone but I did in the end and he has organised that bench top, put the holes in the right places and organised for my plumber to pick it up and it's now been installed in my absence which I'm very happy about with sort of holding up the bathroom. I was getting quotes on landscaping, fencing. I met with our selling agent to work out the plan for the sale of the house and also started organising furniture.
Fortunately, I have a good friend in Brisbane who's got a shed full of furniture. And so I'm gonna be borrowing the key pieces for our styling which will be a significant cost saving. I also went out to dinner with some of our students and I always love meeting them face to face because I don't always know what's going on in the background and often there are exciting projects that I'm not aware of and I happened to find out about one of those at that dinner.
A really lovely couple that I have a lot of time for, in Brisbane. They have just launched into a new venture which involves short term rental or holiday rental. And I think will be transformative for them so I'm very excited for them.
And got that done and then flew to Melbourne and spent some time with my mum as I do each month. Gave her some retail therapy and just tried to have quality time with her. Thankfully her memory allows her to remember me which is great. And we've got to make the most of those moments.
Stephen also flew down to Melbourne, so we had the weekend together. And the first thing we did was have dinner with our Melbourne students and that was lovely because we actually also went and had a look at one of our students high performing short term rental listings in Docklands. It's really good to see what other people are doing because it really inspires you and motivates you.
Motivation is like bathing it needs to be done daily and that's what I think these get togethers and looking at other people's projects does, it really inspires you and keeps you motivated. This is an absolutely cracking listing. It's a 3-bedroom, 2-bathroom apartment and has an occupancy rate of about 70-75% and the income is between $300 and $500 a night. A really great little property. You don't need too many of those to really produce a decent income.
I've been on a bit of a health program. We spent the weekend with Hanna and Ed, our oldest daughter and thankfully Hannah was very supportive in planning activities that didn't revolve or revolve around dinner and drinking. So we did a lovely walk in Dandenong. We went and saw the terracotta warriors and we also went to a great play at the Comedy Theatre called "Come From Away" which was about the airplanes that were diverted to Newfound landing in Canada during the September 11 emergency. It was really fascinating and funny, so if you get a chance to go and see it I would suggest that you do. Of course we did and indulge in a little bit of good food and great wine. But we're quite restrained. Which makes a pleasant change. For dancing and get together.
And of course when I got back to Sydney it sort of hit the ground running because we'd made a decision to put the Bondi apartment that we renovated with our son David on the market and so had a couple of late nights getting the place shushed up in the styling finish. Ready for photographs which are happening today.
Then, also we have another property which has been on long term rental. Decided to switch that over onto Airbnb. Another couple of days giving that property some love, too. That's now up and the listings going. So yeah, it's been full on. That has been my life.
Let's get into owner building.
Why would you do a project as an owner builder? And to be honest with you, my experience has been that you do it. If it's your own home. There are some states that don't require you to live in the property but generally speaking this is a process that's been created for people who want to project manage a renovation on their own home. When you are doing a serious renovation, like a structural renovation. You usually need either planning or development approval or a complying development certificate and that requires that you engage a builder and that the builders, builders license goes into the application.
Now when you choose to do it as an owner builder then it's not the builders licence that goes into the application it's the owner builder permit or certificate. So then you take the role of what a builder would normally do in managing the project.
It doesn't mean that you don't need a licence builder you probably do but that person then becomes just another one of your trades but your actually project managing the process.
Now, in this episode, what I want to do is talk a bit about the advantages and the disadvantages. Sort of outline what you're responsible for and then give you an overview of the process. So it will just be an overview because it does vary slightly from state to state.
As I mentioned there are some states, I think Tasmania doesn't require you to live in the home or require it to be your family home. It's one of the nuances of the variations from state to state and at the end of the episode you'll be able to download a cheat sheet which will include a link to the relevant site where you can go and find out the exact details for your state.
The main reason that you would choose to do an owner builder project would be, one, to have more control so that your managing your trades and your builder directly and two, to reduce costs so that you don't have a builder's margin over all your trades and the materials that the builders managing.
But the thing is, there is work involved in it. The reason a builder puts a margin is because it takes time, energy and effort to actually manage that process. If you're going to do this as an owner builder you need to have the capacity, you need to have the skills to be able to do it. Some of the responsibilities of the owner builder are, firstly, that you're going to have to get the relevant permissions or permits from your local council or through a private certifier or building surveyor, depending on your state.
And you will be named as the owner builder on those permits and you will engage the relevant consultants as in the engineer, the architect, the heritage architect, the landscape architect, the town planner. Whoever you need to actually do the project and you will need to ensure that the work meets the building regulations and standards and any laws that apply to your project.
Whoever you need to actually do the project and you will need to ensure that the work meets the building regulations and standards and any laws that apply to your project. You'll need to make sure that building inspections are done at the time that they're specified by your building approval. And you'll also be required to obtain domestic building insurance or homeowner's warranty whatever it's called in your state except in Tasmania where it is optional.
Basically, you're it. You're the project manager.
Now I want to talk to you about some of the limitations because this I think is where you need to have your eyes wide open. As I mentioned for most states it's limited to your own home. But there's also a limitation on the number of times you can do it.
And generally, it's once every 5 or 6 years. If you're renovating to improve your financial position it's probably not really going to be something that you're going to be able to utilise. But the main issue with it is that you're required to warranty the work and that's what the domestic building insurance or homeowner's warranty insurance is for.
The thing is that you're required to provide a warranty for up to around 6 years in most states. And the problem is that the insurance which comes under different names its home building compensation in New South Wales, its home indemnity in W.A. its home warranty in Queensland. So there's a whole lot of different names for it. And there are different thresholds for when you need it. As in New South Wales threshold it's $20K, once you work the contract goes over $20K then you need to invest in this insurance.
But the problem with the insurance is it doesn't insure you. It ensures the homeowner. If you were to sell your home within that warranty period and something was to go wrong in that renovation. You would be required to warranty it, that insurance only kicks in if you or the person warranting it has either died or has gone bankrupt or gone missing. Basically, that's the only time that that insurance comes into play. From that point of view being required to provide the warranty on the work I think is quite limiting. It's certainly not something I want to do with.
Occasionally, you might find a licensed builder who might offer to do your work with you obtaining owner builder certificate. Do it under your owner builder certificate. And I would suggest that that's a very bad idea. If you're using a licensed builder you should actually require them to provide the warranty for the work and also the insurance.
In terms of the process for actually utilising the owner builder process. In most states you need to do owner builder training. Now can't remember which state it was but there is one state where you're not required to do it. It's voluntary, actually it's Victoria. It's voluntary but I would suggest that if you're planning to manage a substantial renovation on your home. Then it's a good thing to do because it teaches you good project management skills, the appropriate legislation that you need to be aware of, the occupational or work health and safety requirements of a project.
Basically, how to be a good project manager. You can do the training online, I've actually done it and found it really great value. And once you've done it you get some sort of documentation to say that you've completed and passed. Then you take that documentation to the relevant organisation and apply for an owner builder certificate or permit.
Now in New South Wales, you go to the Department of Fair Trading, in Victoria you go to Consumer Affairs. The cheat sheet will help you with where you need to go in your state and you get the relevant document that will be submitted with your application for council approval or for complying development or similar.
Once you have got that, on that goes your permit. Usually that's accompanied with a homeowner's warranty information as well. And then you're set to go and you can go off and manage your project.
You can probably see how that process is not going to work where your doing renovations to build wealth. Certainly will work in your own home particularly if you're not planning to sell. And just to recap basically why you would do it would be to have more control over your project and to keep your costs down by managing the project yourself.
Why would you not do it? Probably 3 main reasons. One, because in most states you're limited to your own home. The second reason is because you can only do a project once every 5 or 6 years. And the third one is because you wear the responsibility for the warranty and that is a heavy burden to carry.
But in short, the process is that you do the owner builder training if it's required in your state. Once you've done that training, you take your documentation and apply for an owner builder certificate or permit and that certificate or permit will go in with your application for approval for the project. And once you've done that you're on your way.
Okay. So I hope that has given you some insight into the owner builder process.
Before I finish off, the last thing I wanted to do was share with you some of the details for our live event or events in Sydney and Brisbane on the 19th and 20th of October respectively.
I've teamed up with 3 friends and we are going to be putting on an amazing day of training on various elements of building wealth through property. Going to be talking about small development. We're going to be talking about high cash flow through Airbnb and lots of other things.
We're just finalising the details now and tickets will be available shortly. But I wanted to do something really special for my podcast listeners and my community.
What I've done is set up a VIP wait list. That's just for as I said my community and at each of those events I'm going to be having a VIP group for lunch. We're going to get together for lunch. I've got a few things planned for that just so that I can do something extra and special for the people who follow and support what I'm doing. Just to share the love.
If you are interested in spending a day honing your property skills and having some fun along the way. Can I suggest that you follow the link in the show notes and put your name on the waiting list for early bird VIP tickets. Which will be available shortly, but you must be on that VIP waiting list in order to attend that section of the event. And I'm looking forward to meeting you in the flesh.
I actually love people I have to say and I really love to have that personal interaction, find out what you're doing. Just generally sharing the reno and the property love. Don't forget to add your name to the waitlist. And I'll look forward to seeing you at the event.