It’s a conversation that comes up reasonably often in Real Estate Talk, and that is, “How do I get a decent builder?” and even, “How do I get a decent tradie?” In today’s show we talk with Nhan Nguyen from Advanced Property Strategies.
Kevin: It’s a conversation that comes up reasonably often in Real Estate Talk, and that is, “How do I get a decent builder?” and even, “How do I get a decent tradie?” Nhan Nguyen from Advanced Property Strategies joins me. This is something, I guess, you confront quite often. Do you also have to help some of your clients with this, as well, Nhan?
Nhan: Yes, I do. I’ve built over 20 houses or so as a developer – not as a builder, but organized houses. Yes, often my clients who want to build a house ask me those questions, and I help them through the process of choosing the right builder.
Kevin: Let’s learn from your bitter experience. Tell me what tips you have for us.
Nhan: Yes, there’s been a lot of good experience and a lot of bad experience, as well, like you said. The main thing, firstly, to start off with is trying to fit the builder to what you’re wanting to do, because there’s obviously a handful of projects you could do.
You could do what’s called a project home, which is a basic type of build, and there are what are called project home builders who build 300 or 400 homes a year. The other type of builder is what we call an executive builder. They do more of an up-market, up-spec type building. Then there’s the high-end, and there are the units and townhouses type builders. There are about three or four types of builders, and firstly you need to choose what type of builder suits your project.
Kevin: It seems to me one of the major concerns with people is their builder is either not going to go out of business or is not going to misuse the funds. Would I be right in assuming that some of those big builders, those project builders, are probably going to be more reliable, Nhan?
Nhan: Yes and no. I agree with you. The things that concern me when I’m talking to a client or an investor about choosing a builder is definitely, one, going broke, or two, mismanaging the funds. That’s not to be really negative as such; it’s more so to deal with reality. There are many builders out there, and a small portion of them don’t know how to run a business, and as a result, that affects you as a client.
Kevin: Great builders but poor businesspeople.
Nhan: Exactly. Just because you know how to build a house and use a nail gun doesn’t mean you know how to manage cash flow, staff, approvals, and juggle it all at the same time.
Kevin: Let’s move on to a couple of the other tips then.
Nhan: One would be that ideally the builder has been around for a reasonable amount of time – five, ten, 20 years – and doesn’t have a lot of debt in their business. It’s hard to know whether they have a lot of debt, but you can watch them over a period of time or at least know that they’ve been around for at least five to ten years.
Another thing that you want to watch – if you can, if you find this information out – is to make sure their growth hasn’t been too erratic. When any business grows, as you might know, there are constraints. You have to put more staff on, more office, more expenses.
On some websites – in Queensland, we used to call it the Building Services Authority, the BSA; they’ve changed their name now – you can search the builder’s history and find out if they’ve had complaints, as well. That’s another way to do research. Find out if they’ve had complaints and been served notices of complaint for bad construction practices.
Kevin: I believe there are similar sites in the other states, as well, where you can check the stability of the builder.
Nhan: Exactly. It comes down to customer service. At the end of the day, it is a business. Whether you own a restaurant or a building business, it’s customer service. If people complain, there’s a reason for that. People don’t just complain for the sake of it.
Erratic growth is definitely something I’d check out, and turnover. If a builder is growing too fast in a short period of time, especially in the first one to five years, it can be very detrimental to you, especially if they’re using your money to pay for projects they did one to two years ago.
Another way I suggest with any business is to go and get referrals and references from people who built one, two, three years ago with them. When you finish a building, there’s generally a six- to 12-month warranty period, and the builder gets called back to finish any things, like leaking taps, or materials that have been used improperly, or render falling off. If you speak to customers who have used the builder before, then you get a realistic idea of do they answer the phone, do they return your phone calls, and do they give good advice?
Kevin: Just getting back to an earlier point you made there about the BSA in Queensland – the Building Services Authority or whatever they’re called now – on its own, that’s not a good enough check. I’d suggest you should be doing all the checks you’re talking about. Because on that site, I’ve actually seen builders who have a very bad reputation, and they’ve remained on that site. You shouldn’t just take it at face value.
Nhan: Correct. I absolutely agree. These things are all-encompassing. You need to do everything you can to do that research. A big part of it doing your research before you actually go out and buy a block of land, and doing that part-and-parcel. Rather than just buying a block of land, and saying, “Yes, I’m going to go build a house,” you have to do the research on the house builder during the process that you do the land acquisition and business planning, as well.
Kevin: Very good advice, Nhan. Thank you very much for your time. Nhan Nguyen from Advanced Property Strategies. Thanks, mate. We’ll catch you again soon.
Nhan: Thanks, Kevin.