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Did you know you can have more than one PPR? + Securing ‘off market’ property + Nightmare building situations solved

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Highlights from this week:

  • Without doubt, one of the most commonly asked questions we get is “How do I get ahead of the market, and how do I find out where these hotspots are?”
  • We tell you about a new website that helps you beat all the other buyers by finding out about off market properties.
  • Karen’s question about capital gains tax on a holiday home is answered.
  • How to make sure that everything is okay prior to you taking over a property that you’ve just had built.

Transcripts :

Two PPOR? – Ian Rodrigues

Kevin:  I want to answer a question now that came in from Karen. Thank you, Karen. I understand that Karen and her husband, while they love listening to the show, they do it on Saturday morning lying in bed with a cup of tea.

Well, as you’re listening this morning, Karen, with your cup of tea – and I hope your husband got it for you – it’s good to have you in the show, we’re going to answer your question. Ian Rodrigues, who is the Director of Bishop Collins Group, joins me.

Good day, Ian. How are you?

Ian:  Very well, Kevin.

Kevin:  Good, mate. Thank you very much for your time. Let me read this question from Karen:

“I’d like to find about capital gains tax in relation to a holiday home that we own. The ATO says that costs relating to the acquisition, holding, and disposal of an asset can be added to the cost base. Does this mean that we can add the interest we pay each year to the cost base?

“Unlike our other rental properties, where we claim the interest as part of the costs each year, this house has never been rented, so we weren’t claiming anything, but as it isn’t our principal place of residence, it will be subject to capital gains tax. At this stage, we have no intention of selling the place and are likely to move into it as our retirement, but I’d just like to get my head around the things that we should ensure that all the paperwork is in order.”

Quite a few interesting points inside there, Ian, aren’t there?

Ian:  There is. It’s good to see Karen and her husband thinking about these things because it is important to plan for it. The short answer to Karen’s question is yes, you can.

The question about cost base on this asset is if you’re not renting it, all those costs – acquisition, holding, disposal, interest rates, repairs – all those things need to be kept a record of so that you can add them to your cost base. Obviously, it becomes a bit of a task over the years because you have to remember to substantiate those and keep records for it, but in essence, when the property does get sold, those costs are effectively a tax deduction in the sense of they’re part of that cost base before calculating the capital gain.

Kevin:  Karen makes a point in there about she says this particular property, it was never rented out, so therefore it doesn’t qualify as their principal place of residence. Is that in fact the case?

Ian:  You need to be really careful here and look for some opportunities because the rules about principal residences are you need to establish a place that it’s your principal residence, which means that you live there. Now living there can be a range of things, but my view of the world is that you can have 20 principal residences.

If you choose to have a house in every town and live in them for part of the year, that’s your call. You may well establish all of them as your principal place of residence. The only thing the Tax Act says is that you can only choose to have one for tax purposes.

Kevin:  That would trigger at the point of sale?

Ian:  Yes, so the point at which you need to decide which one you’re going to claim is when you sell one of them. A lot of people, and Karen may be one of the lucky ones who may have a house that they primarily live in and have a holiday home that they live in part-time that may well both qualify as principal residences, but it may be that their home is pre-capital gains tax, in which case, you wouldn’t bother claiming that as your principal residence, and you may well be able to claim the secondary dwelling that you have as your principal residence, and one’s pre-CGT and one’s principal residence, and both may be exempt from capital gains tax.

Kevin:  Wow. That’s interesting, yes.

Ian:  It is a point that a lot of investors and taxpayers may not realize there are other opportunities like that. Pre-CGT, which is September 1985, is becoming a little harder and harder to find, but there are a lot of people of retirement age now where their main house is exempt anyway. Therefore, having a second house as a principal residence gives you, I suppose, two bites at the cherry.

Kevin:  Yes. I can just see Karen and her husband in bed now have probably spilt their cup of tea. That’s some pretty good news there, Ian.

Ian:  It may well be. The facts of the circumstance are the bit I don’t really understand – the whole history of what house they own and where they live and how long they live there. They need to go and see their advisor and get some advice about would this property qualify as a PPOR and it may well be, yes, as you say, the best news they’ve had this morning.

Kevin:  Well done, and Ian, thank you very much for that advice. Karen, if you want to contact Ian and his team, you can do it just by contacting them through their website, Bishop Collins Group.

Ian, thank you very much for your time.

Ian:  No problem, Kevin. All the best.

 

Do hotspots really exist? – Jane Slack-Smith

Kevin:  Without a doubt, one of the most commonly asked questions I get is “How do I get ahead of the market, and how do I find out where these hotspots are? Do they really exist?” Let’s talk to Jane Slack-Smith about that. Jane, of course, is running a Hotspotting Workshop in Brisbane, knows all of this, and is actually doing them in other parts of the country, too, that we’ll find out about in just a moment.

Jane, thank you very much for your time.

Jane:  Pleasure, Kevin.

Kevin:  Now you’re delving into hotspots. What’s taking you into that area, Jane?

Jane:  Actually, it’s no different what I’ve always proclaimed. For me, actually finding the best renovation property comes down to location first. I’ve always concentrated front-end on the data-driven analysis of locating the right suburbs, streets, and properties within that suburb to then determine whether there’s pricing disparity to do a renovation. Location is still very much key to me, and finding that hotspot, as you said, is absolutely what everyone’s after.

Kevin:  I have to ask you about what a lot of people say to me, too, and that was a second part of my question – “Do they really exist?” – because many people say “By the time we find out about this hotspot, it’s no longer a hotspot.” How do you get ahead of that curve?

Jane:  I get to asked to write articles all the time for magazines, and it surprises me when I do all this analysis and try to find these locations, they don’t get published for three months, and then it becomes quite, as you say, frustrating because the data is old.

What I teach people is how to create the data-driven analysis themselves to be able to identify that hotspot or the next arriving market and have the data behind it that validates it. We’re looking at just simple things like the ripple effect where areas that have had good growth over the last 10 years: what are the next suburbs past that that maybe get the growth in the future because of affordability issues? Or what about areas that have the infrastructure spend going into then, the gentrification going on?

When we start seeing that kind of information, I guess, it’s almost a proven success formula for a suburb that says “Based on past data, this is what has been a success of properties and suburbs that have gone up in this area in the past and we’re applying that now.”

Rather than waiting to read about it in the paper or in the magazines when the data is three to six months old, we’re actually talking about finding those areas yourself.

Kevin:  How much of it is really understanding the data? How much can be data-driven, and how much of it is gut feel?

Jane:  Oh, Kevin, I leave my guts out of it. I was an engineer by trade, so everything to me is data-driven. At the end of the day, walking the streets and getting a feel for the area and understanding what the area is like and validating the demographic information you have is important.

I get my students to work through the dot map exercise to understand emerging suburbs and then using reports. In our one-day workshop, we spend thousands of dollars on reports from every property expert and collate those into the list of our emerging suburbs, and then we put them into our Suburb Selector software.

I think I can say with lots of confidence that we’re the only ones with the 2016 census data in there at the moment, and we’re applying what’s happening in that suburb at the moment and looking at the percentage of renters to make sure that we have a low-risk investment because there is the rental demand there. We’re looking at vacancy rates. We’re making sure the number of sales, that there is a turnover so that we’re not wasting our time in the suburb.

For me, the data-driven analysis allows you then to get to the suburb, and in the workshops, we end up with three suburbs. We choose one, we get down to the street level that you can find what streets the renters want to be in, and then we look at the typical property.

I’ve seen in the census data there’s been a change over the last four to five years of the typical property, and some of these suburbs have moved more to the townhouse semi, so we’re actually making sure that we’re reducing our risk as an investor again by actually getting the typical property for the area.

And then when we get into that final analysis on the suburbs, I get students to get the last year’s worth of sale data and actually put down that data on a map of the suburb and find out where the townhouses or semis or units getting the higher prices. What side of the street is actually demanding a higher price?

That kind of analysis, you can leave the kind of gut feel at home when you get down to that level, and then hitting the streets and doing the inspections and validating is really the last point of call. So, 90% of the work can be done from numbers alone.

Kevin:  What’s occurred to me listening to you now is the data is out there – it’s been out there for quite some time – but it’s actually knowing what questions to ask about the data. I was just listening to you say then which side of the street is going to appreciate greater and why. They’re the kinds of questions, I guess, you can learn at things like your Hotspotting Workshop.

Jane:  Absolutely. And it comes down to things like there might be a suburb that has 20% public housing in it – not such a bad situation, but just know where that is. Often, obviously, people in public housing are renting, so if you’re looking into finding the area or the territory that you want to find properties within, it may exclude where the public housing is.

It’s actually looking at the data and getting down to as an investor… And we’re in a changing market at the moment, and I am an absolute believer that there’s so much opportunity while people are worried and stepping back, and the people who buy now and buy well will be the people in three to five years everyone’s saying, “Oh, you were just lucky.” I’m happy to be lucky, but I know the data is behind it and I know that’s what my students have.

But the analysis that goes into it, and as you say, the questions to frame the analysis around… Let’s just actually get down to the right property that people want, that’s in demand, that will continue to have the growth, and apply that trident strategy that we do.

Buy under the market, which has been hard in recent years because the market has moved so quickly, but now market intelligence allows you to know an area and take opportunity. Market reluctance is allowing me to take the opportunity while people are pulling back.

Renovate and add value to push up the rent, so you have a better cash flow position while you’re waiting for that long-term growth to come because you’re in an area where people long-term want to live.

For me, it’s about getting the right analysis, asking the right questions, coming down to having the right property to purchase to put in your portfolio.

Kevin:  I told you about the workshop that’s coming up. I’ll give you more details on that in a moment. Just before I do that, Jane, what can people expect to get from this workshop?

Jane:  Essentially, we jump boots in. Everyone collaborates. We do a dot map together for that city – so Brisbane will have a dot map – we’ll go through all the software and paid reports that we cover the cost for, and we’ll come up with three suburbs and we’ll go into a lot of detail on one suburb. We’ll jump on a bus, we’ll go and do an inspection and show how to inspect with our four-checklist process.

Better still, we’re having students  – and it’s only limited to 12 people to a workshop who are actually taking this data – some of them decide that it’s a bit hard for them, and they’re handing that data and the criteria of the suburbs and the streets and the suburb over to a buyer’s agent, and they’re buying properties within two to three weeks – targeted properties that go into their portfolio – and they’re following us around the country and attending every one and purchasing property.

It’s a great testament, I think, to the workshops themselves that people are actually coming out with the properties very quickly afterwards.

Kevin:  Wow. A lot to get through. Jane, I want to thank you for being with us. Let me tell you about the workshop. Go to the website. We’ve set up a special website for you to go and get all the information you want. It’s called HotspotsWorkshop.com.au.

The Hotspotting Workshop is going to be on in Brisbane at this stage. It’ll go to other areas around the country a little bit later this year, but in Brisbane on the 26th of August at the Royal on the Park in the city. That website again is HotspotsWorkshop.com.au.

My guest has been Jane Slack-Smith. Jane, thank you so much for your time.

Jane:  Absolute pleasure.

 

Mobile Home Park investment – Jefferson Lilly

Kevin:  I’m going to introduce you to my next guest. He is Jefferson Lilly, and Jefferson is a self-made millionaire, mobile home park investment expert, educator, and industry consultant based in the U.S.A. He joins us to talk specifically in the show today about mobile home parks and the investment opportunity they offer – particularly in the U.S.A.; we’ll try and explore a little bit of that in the Australian and New Zealand markets as we move through.

Jefferson, thank you so much for your time. Great to be talking to you.

Jefferson:  Cheers, mate. Maybe that’s as much Australian as I speak.

Kevin:  You had to get that in, didn’t you? Jefferson, let me firstly just mentioned that you have a very successful company called Park Street Partners that specializes in this type of investment. But interestingly, too – and this is how we met – you have a podcast called MobileHomeParkInvestors.com. That’s a nice little adjunct to your business. I know it’s you and your partner who actually cohost that each week.

Jefferson:  We do, Kevin, yes. We get between 10,000 and 12,000 downloads a month for our quirky little niche of mobile home park investing. Yes, we’re both helping other folks in the business operate their parks better or get into the business, but we also have folks call us then just wanting to co-own parks with us by investing in our fund, or we occasionally also get deal flow.

We got our park in Raleigh-Durham, North Carolina, from some folks who had listened to our podcast and knew it was off market but coming up for sale. We podcast both to raise money and to raise deal flow.

Kevin:  Jefferson, just explain to me the ownership of the parks. Do you know the freehold to the parks and then you lease out the homes, or do people actually come in and buy the home in some kind of a strata scheme?

Jefferson:  We really view this business, frankly, as being a parking lot business. Approximately 90% of the folks who are in our communities own their own mobile home, so obviously all the proverbial leaky toilets and leaky roofs and that maintenance is on them. And then we do own approximately 10% of the mobile homes, but all of those are on rent-to-own agreements, so we have folks really who are buying those homes from us.

Hopefully, call it five years down the road, all of those homes then will have passed into the hands of the residents, and we’ll be back to just owning the land that, again, more responsible homeowners then pay lot rent into. In the long run, we just want to own the land.

Kevin:  Someone who has a mobile home in your park, are they able then to sell it in situ. In other words, if they decide they don’t want to be there anymore or they have to relocate, can they actually leave it there and then on-sell it? If so, how does that happen?

Jefferson:  Yes, they certainly can. Once they own the house, it’s their property. I suspect it’s similar in Australia. At least here in the States, mobile homes have a VIN number, vehicle identification number, and they title trade through the DMV, as we call it, the Department of Motor Vehicles, just like an automobile.

Anyway, once they own it, sure, it’s their personal property – it’s not real property; it’s personal property – and they could sell it. They might sell it back to us; more likely, they would sell it through Craigslist or a local newspaper ad and sell it to someone else.

Typically, it stays in place. Even if ownership changes, the mobile homes do, almost always, tend to stay in place. That means, of course, our cash flows continue: either the previous or the subsequent owner is paying lot rent. Frankly, we don’t care.

They are sort of movable. It’s expensive – maybe $4000 or $5000 to move a home – but occasionally someone will move the home out to another park, but again, they virtually always stay in place and the title trades through the DMV and people find other folks through Craigslist or newspaper ads, and that’s typically how homes change hands.

Kevin:  As the owner of the park, how much control do you have over the ongoing maintenance of each of these homes? Because I could imagine if one gets run down, it’s going to pull down the value overall of the park.

Jefferson:  It could, although at least in the U.S., mobile home parks are not generally quite as downscale as they might be in Australia. Probably our average tenant earns between $30,000 and $35,000 U.S. a year. In general, we’re not dealing with the real bottom feeders or folks really completely down and out on their luck.

But indeed, we can and do enforce park rules, and if a house is particularly bad on the outside – it’s rare that it happens – we will require a tenant to repaint the house or, frankly, we might just go ahead and repaint it on our own. So far, nobody has really objected to getting a new paintjob.

It’s rare that we have to do that, but with our average lot rent being, perhaps, $300 a month and it being maybe twice that to repaint a home, if the outside is really bad, we’ll just go ahead and do it and, again, we’d have all our money back in a couple of weeks, but, hopefully, the tenant would, in fact, just paint their own house and keep it up.

We do also enforce things like requiring tenants to mow their lawns and not have cars up on blocks, as we say. The cars all have to be running. So, we really work to build a basic middle class neighborhood. We try not to run these as real junky properties. That’s not typically the way it goes, certainly not our properties.

Kevin:  You obviously have some standards in place from what you’re saying there. It’s an area of investment that we haven’t really focused a lot on, and no doubt, there are parks within Australia, and there will be people who are listening to this podcast who will want to input into this conversation. You’re more than welcome to send me an email through the website, kevin@realestatetalk.com.au. We’d love to have your feedback. If you are involved in this type of investment, I’d be keen to know what’s happening in the Australian market.

Let’s look at the investment opportunities with you just for a moment, Jefferson. Anyone who wants to know a little bit more about it, we’ll give you that website again at the end of this interview. What sort of returns can we expect if we were to invest with your company?

Jefferson:  Our funds have been returning between, say, 12% and 14% cash per year, and then appreciation we estimate might be another 6% or 8%. We think overall, our investors should be compounding their money at approximately 20% a year.

Again, more than half of that paid out in cash quarterly, but there will be some lumpy payouts as we sell or refinance properties and recognize that appreciation, which again, should bring their overall return from the low teens upwards towards about 20%.

Kevin:  Is there a minimum amount of investment that someone would have to make into the company?

Jefferson:  $50,000 U.S. and they would need to be an accredited investor or whatever. They don’t have to meet U.S. standards. If they’re Australian, there is a somewhat similar standard in Australia for investing in these sorts of funds. $50,000 U.S. is the minimum.

Kevin:  It’s been great talking to you, Jefferson. We are out of time, unfortunately; we’ll have to go. But just to repeat those websites again, ParkStreetPartners.com is the website, and the podcast, if you’d like to have a listen to, a lot of good information there, too, and a way for you to reach Jefferson and his team, as well, is mobilehomeparkinvestors.com.

My guest has been Jefferson Lilly. Jefferson, thank you so much for your time.

Jefferson:  Great to be with you, Kevin.

 

Finding ‘off market’ properties – Liane Fletcher

Kevin:  I guess it would be fair to say that when they’re looking to buy a property, most buyers would love to know about listings before they hit the Internet. Well, here’s a great opportunity for you to do exactly that. I’m talking now to the co-founder of a new website called Property Whispers that specializes in doing that. Joining me to explain how it all works and how you can take advantage of this, Liane Fletcher.

Liane, thank you very much for your time.

Liane:  Hello, Kevin. Thank you.

Kevin:  Tell me about Property Whispers. How does it work?

Liane:  Property Whispers is a very simple platform, four simple steps. Buyers register for free on the platform, and they list their property requirements. Real estate agents list their off-market property specifications, and an instant match occurs when a buyer’s requirement matches the off-market property.

That’s where the job of the platform ends, and after that, the buyer and the real estate agent connect, they speak, maybe arrange to meet with the property, and hopefully a sale will follow.

Kevin:  Okay. So, it’s not available for people to put their own properties up there, but buyers should go there and register so that when a property is listed on there by a real estate agent, they’re advised straight away. Is that correct?

Liane:  That’s correct. It is listed by the real estate agent, yes.

Kevin:  I know this specializes in off-market properties. Off-market properties – purely by the name – means that they are on the market but they’re not publicly available. Is that correct?

Liane:  That’s correct. There are two definitions for off-market. One, they are a quiet listing. That is a property that is not publicly advertised. Those properties are vendors who never want to go and spend money on advertising, for whatever reason.

Then there are those properties who are listed pre-market, and that is those properties for sale before they are listed potentially going to an auction campaign. So, they are given that opportunity to be sold off-market.

Kevin:  Just from a buyer’s perspective, how many of these off-market properties would you estimate are available at any point in time?

Liane:  Nationally, reports indicate that around 10% to 20% of properties are off-market or sold off-market.

Kevin:  That’s a lot of properties, isn’t it?

Liane:  Absolutely.

Kevin:  Would you say it occurs more in one price range than another?

Liane:  It’s across price ranges. We have properties that are uploaded on the platform now from as little as $250,000 up to tens of millions of dollars. So, it does cover across ranges, and it could be for investments or family homes or development site blocks of land. It does cover across the spectrum.

Kevin:  I’m talking to Liane Fletcher about the website called Property Whispers that specialihes in putting you as a buyer in touch with off-market properties. These are properties that are maybe pre-marketing campaign or where the sellers don’t really want to make it too public.

Liane, I’m curious, how did you come up with the idea to do this?

Liane:  Kevin, when I was an active agent, I spoke to many buyers who were struggling to find a home online, and they would ask me to let them know if I knew of anything that was off-market. So, I’d take their details, put them on my database, and get back in touch when I’d have a property that was suitable for them.

At the time, I thought, “Wow, these buyers need to do a lot of work to get in touch with as many agents as they can in their area to find out about the off-market properties that are available.” At the same time, when my vendors wanted to sell off-market, there were times when I just didn’t have the right buyer on my database who would suit the property.

So, I was thinking about how I could help agents find the right buyer and also at the same time, help buyers have access to off-market properties in the area. This is how the story was born, matching buyers with off-market properties listed by real estate agents.

Kevin:  I’d just like to make the point that you are working with agents. This is not an opportunity for sellers to put their properties up there and cut the agent out. The agent is still very much involved in this transaction.

Liane:  Yes, absolutely. It’s the agents who are listing the off-market properties, and they’re the ones who are having the communication with the buyers.

Kevin:  Okay, so if you’re a buyer, all you have to do is go to the website. It’s called PropertyWhispers.com.au. You can register there, then you’ll be advised of any properties that suit your requirements. And if you’re a seller, I suggest that you talk to your agent and tell them that they need to get your property onto Property Whispers, PropertyWhispers.com.au.

Liane Fletcher has been my guest. Liane, thanks very much for your time.

Liane:  Thank you very much, Kevin.

 

Protection for new home buyers – Paul Corn

Kevin:  Paul Corn from Handovers.com joins me. Handovers, of course, is a company that will come in and make sure that everything is okay prior to you taking over a property that you’ve just had built. This can be a bit of a minefield, having spoken over the years to a number of people who have had some real big problems with builders and new buildings and what happens when they eventually move in.

Paul, from your experience, what do you see are some of the major frustrations people have when they’re dealing with a builder and they’re going to take over a brand new home?

Paul:  Kevin, one of the main things we see is lack of communication from the builder. They get caught in limbo, they don’t know what’s going on, they ask questions. That is the number one that we see.

Kevin:  I want to talk to you about how you actually know that you’re getting a good builder, and I guess good builders aren’t necessarily good communicators, which is really what you’re saying. Lack of communication. What are some of the other frustrations?

Paul:  A lot of clients want to go to the site and have a look at their house, and the builder sometimes doesn’t let them do that. But as per their contract, they are entitled to do that.

Kevin:  This wanting to go and have a look at the property, even though you have a builder who you’ve engaged and they’re building it for you, it doesn’t become yours until you make that final payment.

Paul:  That’s correct. You have to get permission to enter the job site at any time, and it is in normal business hours.

Kevin:  Is that just a safety rule?

Paul:  Safety is the main one but also disrupting trades while they’re working, that sort of thing.

Kevin:  Does the same apply with renovations?

Paul:  It depends on if you’re still living in the house. Normally, that area should be locked off. Yes, it’s all to do with workplace health and safety.

Kevin:  As well as safety, I imagine there are other risks as well, like materials being taken. I imagine this would happen quite often on building sites as well, materials and tools that just go missing. I’d imagine builders would be pretty concerned about that.

Paul:  Yes, theft is a big thing. A lot of people treat building sites like a Bunnings Hardware: they just take what they want.

Kevin:  Without the checkout.

Paul:  Yes, that’s it.

Kevin:  That’s terrible.

How do you know that you’re getting a good builder, Paul?

Paul:  Research. You have to do your research. I always recommend that if you see a house being built by the builder you want to go with, and if you can go and knock on their door and ask what their experience is like, you can’t beat research. It is the main way to find out how a builder is.

Kevin:  Research, and also talking to people who have had that builder, do you think?

Paul:  Yes, word of mouth. The best advertising for anybody in our business is word of mouth. But saying that, Kevin, the supervisor is the person who builds your house. If the builder has a good supervisor, then you’ll get a good house.

Kevin:  Yes, that’s a really good point. The name out the front doesn’t matter.

Tell me about supervisors. What is their role?

Paul:  Exactly what they’re called, supervising. They need to supervise, they need to forward plan, they need to control the job. Their job is to control the quality of that house. We see some shockers, but the worst part is we meet supervisors who haven’t come through the industry. I met a guy the other day and asked him his background. His background was banking. Now, no disrespect…

Kevin:  Nothing wrong with that, but how long had he been in the building trade?

Paul:  Three months.

Kevin:  Wouldn’t it be better to get supervisors who have practical, on-the-ground experience? You as an example, you have good background, you have good experience of the building trade.

Paul:  Yes.

Kevin:  If it’s that important, why aren’t they the highest skilled person on the building site?

Paul:  Honestly, I don’t know. I’ve met a tiler who was a supervisor. Once again, no disrespect to tilers, but he wouldn’t know anything about the framework of that house.

Kevin:  That’s right. The thing that scares me is that when you get to a building, there’s lots of stuff you can’t see behind. We had an experience recently with someone who was on the show. He’d had some frustrations with the building company. He and his son had a lot of complications, and a lot of the stuff was actually hidden where you couldn’t see. That scares the hell out of me.

Paul:  When we do our inspection, we’re looking at the finished product, so everything once again is hidden. But you hope that the builder’s certifier or the engineer who certifies the slab, the frame, the roof trusses, all that is doing the right thing by the industry.

Kevin:  In the event that you have a successful claim against a builder, how much liability does the inspector carry? Is he liable? Does he have to have any professional insurance to cover it?

Paul:  No, that’s under the builder’s umbrella. He’s working for that builder, so the builder is responsible. They’re the ones who carry the can.

Kevin:  What’s the difference between them and a certifier?

Paul:  The certifier is more highly trained. He probably does a university degree to become a certifier.

Kevin:  Who does he work for?

Paul:  The certifier is independent. He works independently. He’s probably engaged by that builder to say, “Yes, it’s okay to pour the concrete,” or “It’s okay to sheet the walls.”

Kevin:  Is the inspector on site the whole time?

Paul:  The supervisor?

Kevin:  The supervisor, sorry.

Paul:  In today’s world, no, because he might have anything from 20 to 60 jobs. Now, any building company that gives a supervisor 60 jobs is nuts because they can’t do it.

Kevin:  So, you have the supervisor, but then you have got the certifier. At what point does the certifier come in?

Paul:  We’ve got the slab, the framer puts the frame up, puts the roof on, then they come in and have a look at the frame, and it has to be certified. You have to get the okay to sheet that house with the gyprock, and that keeps the process going. You can’t go any further until the frame has been given the tick of approval by the certifier.

Kevin:  So, all the way along the line the builder is the one who carries the can. He’s responsible. If anything goes wrong, they would sue him not the…?

Paul:  Well, they’d probably work their way backwards. You would start with the builder and then to the certifier.

Kevin:  So you could actually sue the certifier.

Paul:  If they put something through that’s not right, I’m sure they’re in the firing line.

Kevin:  Do they have insurance to cover them for that?

Paul:  Yes, they would have to have that.

Kevin:  Okay. I’m just trying to track through the areas of responsibility here, because if you have a problem with a property and you have your builder, that’s a minefield of people who are involved in it.

At what point does someone engage with you and your business? Are you willing to get involved and oversee a lot of the project?

Paul:  We are licensed builders. My company is licensed, but we can’t give any certification information.

Kevin:  No, but you could give some advice.

Paul:  We can give advice. We can ask questions. If we see, let’s say, a bracing ply that’s not correctly nailed, I can ask the question “Is this bracing ply nailed as per the code?” But I can’t put in writing that it’s not nailed as per code.

Kevin:  But you’d see it and know that it’s there.

Paul:  Yes, we see it.

Kevin:  If I were building a property, I’d want to get someone like you to help me with that process, because I know that we have certifiers and all those, but I’ve seen a lot of this come unstuck too.

Paul:  Yes. The building bush telegraph is very good and you hear all the rumors of what’s going on. But yes, the certifier is responsible, and if he gets it wrong, then it’s his responsibility.

Kevin:  Okay. We’re going to take a break. My guest is Paul Corn from Handovers.com. You can go and check out that website if you’d like to know more about how they work.

 

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