This page is written for builders or developers, and looks at why you might want to consider becoming involved in joint ventures with this club, the advantages to you in allowing some of the plots to become available to our members and the considerable scope we see for such arrangements, as well as in working with us on larger sites we find.
For everyone involved in providing homes, the builder, larger developer and self builder, the common problem exists of obtaining the best building plots, and at a sensible price for the area. In many ways you might think that we are in too close a competitive position to be able to look at joint ventures, but I hope here to show you that there can be mutual benefits in considering ways that we could become involved in joint ventures.
Over this article I want to look at a range of reasons and ways that we could work together.
To sell homes on any development, and to get the most for these the developer needs a lot of interest, lots of people looking at the plans and show homes when available and to project an image to the potential buyers of a select, quality development. In order to achieve this, most developers spend a sizable sum in advertising, literature, show homes and staffing to bring this about and may also offer incentives or discounts and other benefits to try to tip the scales in their favor. The largest single factor in making sales faster, beyond the general state of the housing market, is in attracting enough likely buyers to come to look at the site and what is available. This is where I would suggest the benefit of having some self build plots on the development comes in, in that many people will be attracted to the concept of self build and therefore many will wish to come and see what is happening. In doing so, some will also look at what else is available on the site and a percentage of these will be attracted by the ease of purchasing from a developer and the package that is on offer. Remember that if you were to ask people if they would prefer a home built to their own specification most would say that they would, but still well over 80% buy through developers or builders.
A site is of a set size, the larger it is and the more unsold properties there are, the more the potential buyer may feel that they can wait. Developers have a number of ways to overcome this including splitting the site into development stages and allowing some off plan sales at a discount.
In many cases the developer involved in a joint project will not be just dividing off a section of the site, but will be providing the access, roads, services and some other facilities. They will be making a sale of not just the raw ground but serviced plots, and this sales income will come in addition to their expected sales at this time. By choosing to market a section of the site in this way, they have also decreased the number of units available to sell by other means and created the impression of far more commitment at an early point. Where the club is involved, we may well agree to take all the options to self build plots, and these will count immediately towards the number of plots sold and percentage of the site where options have been taken. As these plots will then not be available to the general public, but only through members, we will not be competing with the developer for the general public. As joining the club involves a sizable payment, its not ever likely to appeal to a large percentage of the population.
Creating a collection of self build homes on a site that meet a high specification, and most self builds are built to a higher specification than other developments, will give the impression that the area is select and help to justify the prices being asked. The effect of this should be that the average price obtained for the houses the developer sells will be higher, and as the number of self builds are likely to be a smaller percentage, the effect should be that the site overall generates a larger profit than if no self builds had been included, is sold out quicker and sales cost are reduced.
Continuing with this theme of lifting the ceiling price of the area, why not add landmarks to an estate, by this I mean select a small number of highly visible sites, perhaps at the end of cul-de-sacs or in corner locations near the entrance and look at having far larger self build individually designed homes, with a requirements to qualify to purchase the self build plot, that it has to stand out as a work that will be noticed. The effect is to transform a sea of standard roads and soulless development into an area with character, where navigating around becomes simpler and the area stands out as something special. Given a choice most people will go towards the center option as you will know, adding some above the specification of the others will have the effect of moving up the amount each is prepared to spend on their homes, as well as of course making it a more desirable place generally and increasing both the rate the properties are sold at and the price that can be asked. Another concept around landmarks is the village center for a larger developments, or to help persuade planners that a larger area should be developed. The village center concept can be enhanced with self build plots built within a theme, for example individual thatched homes in stone around a village pond or green, complete with some stores, a pub and more, specific requirements such that all should have sprinkler systems installed can be defined. You will see how this can add an attractive feature rather than another plain concrete shopping arcade, lost amongst a sea of similar looking properties. For the developer the profit on the overall development site has been increased and the people who choose to live in the area, lives improved.
In times when houses sell instantly, prices are in rocket mode and people keen to make the decision to buy, the developer can feel confident that sales will happen and income will continue to flow. At times when the media upsets this or there is likelihood of a housing price correction or fear of further falls, few will be waiting to buy at that time and therefore there may be quieter times for the developer. On the self build front these peaks and troughs are not so pronounced, so we can expect a steady stream of people entering the self build marketplace whatever the media has to say. This is in part because the self builder sees a far greater differential in value on completion of their home to the person buying from a developer, so the risks are considered to be smaller. Should times become quiet, there is the scope for the developer to look at rescheduling the release of phases with more becoming available to self build plots, keeping the cash flow positive and allowing you to move forward and look at new projects rather than being locked into existing ones only.
The vast majority of self builders do no building or work themselves beyond perhaps a little decorating, and many will use project managers, often shared with other self builders on the site. This should offer the developer another opportunity, in that they could offer project management and already have tradesmen and others on site as well as other common cost that can benefit all concerned.
In some cases a different situation may arise in that the planners may insist on a percentage of affordable or starter homes within a development, and this has the dual disadvantage for developers of far lower margins and devaluing the value of other properties within the development. In addition the marketing for these properties will differ considerably and present both a problem of additional cost and a mixed message about the development. While many think of self build being the larger more spectacular properties this need not be the case and it is one of the clubs objectives to help first time buyers and those who cannot afford to buy properties offered by developers to become involved. We have also been involved in setting up a separate non profit organization called the Affordable Homes Project. I would therefore suggest that we can look at these situations, no longer as a problem, but an opportunity. By the combination of design, and the discount achieved through self build, vat refunds and more we feel that we can find ways to introduce affordable housing to sites that does not devalue the development as a whole. It should not pull down the prices of other homes sold or present you with the problems of mixed messages to the market. We will therefore look at all situations with developers where scope exists for self build opportunities with any sized properties, and this mixed form of development is likely to be acceptable to planners.
There can be resistance to further development and this is often increased by the view that the properties are for outsiders and will not be affordable by the people of the area and their children. By involving the Self Build Homes Club, and by us actively promoting membership within the area, it is likely that a number of local people will join and therefore the scope to provide homes for people of the area and their children becomes a selling point, and creates some support in the local area, for the overall development.
Many developers will either be offered land that they will not find attractive or land where only a part of the site is attractive to them. It may be for example that your developments are based on level ground, and the site or part of it has too great a slope for standardized production, or it may be necessary to use different types of foundations on the site that does not suit you. In all of these cases it is worth talking to the club, as many self builds are individually designed, sloping sites and special foundation requirements does not present so much of a problem to us, and can be in some cases particularly attractive. Clearly you could just email us with the contact and we could take it from there, if you have no other interest in the site, but you might also like to look at the potential with us of a joint venture where you provide the basic layout, roads and services and we find buyers for the individual plots. If you also wanted to offer project management and perhaps some other services then you can see you have the potential for the development of a whole new division of your company, but with no marketing costs.
Another common situation is that when laying out a new development you find that there is slightly more land in some places than you need, yet not enough to put in another house, and you will then either increase some plot sizes or leave some vacant space within the development. This comes about because although you have a number of different sizes or styles, you find that in the combination of properties that you want to put onto the estate that you quite naturally end up with some odd extra sections. This presents opportunities, perhaps for arranging them so that these spare areas are connected, and while you cannot get in a standard shaped house, an individually designed self build may be possible. In other cases it may be that taking out one house and allowing the larger plots to be used by one or more self builders would give you more profit than you would get from the house taken out. Any small parts that you cannot see how to use should be looked at to see if a more profitable use can be found. In some cases you may have kept back some land so as to have working stores, temporary offices and the like, and while you could build on these later it is more difficult, and you may see the advantage of offering these as self build plots.
Perhaps the planning permission granted to a development was for a set number of houses or rooms, and you will have arranged the site to accommodate them and space for working, afterwards then just leaving this working area as unused space. You may still own a number of these pieces of ground on a number of sites you have developed. While you may not feel you would get a positive response from planners if you then went back and asked for planning for these parts, as they may suggest that you left them for this reason, it is likely that if we as a club were to get an option on these and then approach planners about using them for self builds, we would get a more positive response, particularly where affordable homes are to be built. This therefore presents a situation where you can turn assets, of no use to you, into extra profits.
This of course is a two way situation, we as a club are proactive in finding sites, so far within the size that we can split between members, but in 2005 we will become more proactive in finding and obtaining options on larger sites. In many of these cases the sites we will find and obtain options on will be too large for us to develop on our own, and therefore we will be looking to undertake joint ventures on these, starting logically by talking to those who are most interested in the concept of joint ventures and have been looking at involving us within their sites. Our research suggests we will be able to find sites that developers have not been aware of, including our campaigns planned to show people a way of obtaining local affordable housing, and in encouraging people to look at having a new home built to their specification, using spare land to cover the cost of this. Individual and other owners may also feel happier talking to us, and considering options with us, as it involves them in no cost whatsoever. At the same time we are stepping up our recruitment and have added a points programme to reward members who are involved. The more new members we have, the larger the number of eyes we have looking and the more people we have spreading the word that we want to talk about sites with anyone.
We are also interested at looking at other forms of self build projects, perhaps allowing the developer to offer properties to a shell stage or to offer a variety of build packages in addition to the plots. This may appeal to some developers, as may the opportunity to look at alternative designs to the ones they normally offer and to look at green projects and other projects that could generate a lot of positive PR. We start from a position of ruling out nothing. You will also appreciate that as the club is paid by its members it does not need to be rewarded by you or to profit from individual projects or joint ventures. This means that savings here can be passed onto members, allowing attractive deals to them, that are still very profitable to you
Another area that we are keen to look at is mixed developments with commercial projects, by this I have in mind sites for factories or supermarkets that have some housing available and where perhaps the developer prefers to stick to the commercial part of the site, but also where a developer may see the scope to develop some properties to a shell stage, perhaps over shops or supermarkets that a self builder can then complete to their own specification. As we travel around we see so many sites that have been developed by commercial developers where the scope to include some apartments or other accommodation, has not been considered, and where with a little more thought, the site could have been far more profitable for them, had they done so. By being able to look at a variety of ways this can be considered, via joint ventures through the club, with self builders we would hope to open up more opportunities for members and increase the profit potential on many developments. It should always be remembered that self builder rarely means the owner is actually going to do any building themselves, and far more often it is commissioning, and with the right options this could be largely from the developer on site where this is offered.
As a developer you may feel that there will be a large gap between the people who you would normally negotiate with and the sort of people who would run a club like this, however one of the main features of this club is that we use the best people we can for the job and currently the consultant that will be talking to you will be a very experienced UK company director, currently a director of 15 companies who has had a vast amount of experience over many years including for a few years as the director of a merchant bank based in the USA, later doing company rescues for UK PLC's with problems and in finding and negotiating quality property on behalf of buyers in the UK and USA. His view is that a good deal is one that is good for both parties involved, so will be keen to make sure that not only members get a good deal, but that it is profitable to you, so that you will wish to repeat the experience.
One advantage to you of becoming involved in joint ventures with us, is that you need do no marketing on this, and it presents no loss of focus from your main activities, although provides considerable extra profit, you can work with us to utilize a range of land, surplus sites, or parts of sites, spare areas and more, knowing that we will we able to introduce these opportunities to our existing members and will go out and generate more interest and members in areas where we have more plots available. Like any good deal, these joint ventures will both be good for you and for us.
I suggest you start by looking at the projects you have in the pipe line and those coming up and see if you can see any scope to look with us, at how we could work together, and when you see such an opportunity then contact us and we will be delighted to line up an appointment for our consultant to meet up with a director or senior manager of your company.
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