So, you’re building your investment property or owner-occupier home and the construction’s been ticking along nicely.
Then all of a sudden, you check your email and BANG! You see the Practical Completion Invoice! For some this may be a long-awaited announcement, but it might catch others a little by surprise. No matter how ready you think you might be, there’s nothing like that final invoice to create a whole new raft of feelings. Usually there’s a good dose of excitement mixed with some concern when you ask yourself; “now what?”.
That’s where Capital Properties can help. We’ve already prepared a detailed breakdown about what the construction process after settlement looks like in this blog: “My investment property settled – Now what?”. But here’s a little refresher, with some more tips to help this final phase of the build run smoothly.
On the go? Here’s 30 seconds of take outs:
- Practical Completion stage requires you to take a few more final steps:
- Engage a Building Inspector to carry out a property inspection
- Organise building insurance as soon as you’re ready for handover
- Provide a copy of your ‘certificate of currency’ to your mortgage broker or bank
- Recruit a great Property Manager
- Pay your final invoice and reap the rewards of a job well done!
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Practical Completion Stage (PC Stage)
PC Stage is the trigger point for a couple actionable items:
Engage a Building Inspector
Now’s the time to engage a Building Inspector. If you’re unsure about how a Building Inspector works and why you need one, then have a read of this blog we posted earlier: “Why use a Building Inspector when constructing an investment property”.
When it comes to engaging a Building Inspector, you can opt to:
- Have 1 inspection – which will include an inspection report. In this case, many Property Managers are happy to complete the handover inspection with a defect report to confirm that all the defects have been completed.
- Or, you can choose to have 2 inspections – which will include an inspection report as well as a follow-up inspection and another report that will confirm that any noted defects have been rectified.
Once the PC stage is invoiced there will be an allocated time-frame, usually 2 weeks, to get the building inspection report done and any defects resolved.
Building & Landlord Insurance – Insure Your Investment
During construction the builder takes possession of the site, which means they’re responsible for the building site and any issues that occur on site. That’s why most builders will place a fence around the building site to keep it secure and prevent theft. Builders must also adhere to strict occupational health and safety standards to make sure no one on site gets injured. However, sometimes the unforeseen will happen, so builders will always secure difference types of insurance to fully cover any potential incidents.
When the property handover takes place however, that responsibility falls back on to the owner, so as owner you need to organise adequate building insurance. This is vital to protect your asset, but also to speed up release of finance from your bank, as all banks will require the property owner to have building insurance in place prior to the bank releasing the final payment. This will be in the form of a ‘certificate of currency’ which is issued once you pay the insurance policy. Then you’ll need to provide a copy of that certificate of currency to your mortgage broker or bank.
If you’re wondering what insurance you’ll need, we’ve written about which policies are best for you in this previous blog post; “How to choose the right insurances for your investment property”.
Engage a Property Manager
If you haven’t already, this a great stage to chat with one of our preferred network partners. Get in touch here and we’ll help you find the right person. Or check out this blog: “How to find quality tenants for your investment property” where we share a bunch of tips about how engage a great Property Manager who’ll find you the best tenants.
Fundamentally at Capital Properties we believe that cost of management is only a small part of the decision about which Property Manager will be best for your investment. In fact, in our experience, we know that choosing a Property Manager with excellent communication and people skills is a priority.
Your property management agreement
This agreement will outline all Property Management Fees. It’s vital to review this thoroughly and understand what costs are covered.
For example, some property management companies charge an ‘inclusive’ fee. That means once the rent is collected you won’t be charged for any other fees, i.e. sundries, inspection, inspection reports etc. Whereas other agencies may charge a lower base fee, but all other costs are extra, and those costs can mount up pretty quickly.
Once you’ve signed off of the fees, then you’re on the way to getting your management agreement in place.
PC Stage Invoice / Final Invoice
If you and your Property Inspector are satisfied that all the defects have been completed, it’s now time to action the payment of the final invoice. As mentioned above: Remember that you must provide a copy of the certificate of currency to your mortgage broker or bank.
Payment can take 1 – 2 weeks as the bank will also send an independent valuer to inspect your property. This is the bank’s way of making sure that the property has been built in accordance with the specifications outlined within the contract and plans and therefore the contract has been successfully completed.
Congratulations! Now your Property Manager can find you an awesome tenant, or if you’re an owner occupier, you can start moving your furniture in!
If you’d like more details about investing in property, we offer informative and free Capital Properties discovery sessions to help people like you, in particular Defence Force members, to benefit from our knowledge and climb that property ladder to ensure a great future.