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THE PROCESS

  1. DUE DILIGENCE

  2. AGREEING THE PURCHASE

  3. LEGALS FOR PURCHASE

  4. MAKING ALL THE NECESSARY DIRECT DEBIT ARRANGEMENTS

  5. CREATING AND COMPILING ALL THE CONSULTANT CONTRACTS

  6. DRAFT PROJECT PROGRAMME

  7. ESTABLISHING A PROCUREMENT ROUTE

  8. ARCHITECTURE AND INTERIORS DELIVERABLES

  9. TENDERING AND NEGOTIATIONS

  10. CONSTRUCTION CONTRACT

  11. SITE INSPECTIONS AND REPORTING

  12. COORDINATING SALES

  13. LEGALS FOR SALE

Strengths

• We are able to source sites that are undervalued and present unique development opportunities. We achieve this by utilizing our experience in the architectural industry to develop a design and engage with the local planning authority to maximise the development potential of the site. We also have senior contacts in property auctions who are able to source distressed properties prior to them reaching the market. We aim to make our profit on purchase by securing the property at prices considerably below market value.

• We minimize our costs by reducing the need to outsource the due diligence, architecture, interior design and project management. These services are all done in-house • We conduct a thorough feasibility study prior to proposing a property to investors. This involves an element of financial modeling and profit projection based on current market trends. We also test several architectural options to ensure that we get the maximum value from the site.

• Our design skills are utilized to add value to the property. On all of our development projects we have focused on the quality of the design to ensure that the property stands out amongst neighboring competition. As a result we have observed a quicker sale, at a higher value than previously achieved on the street.

• We manage the construction and so are able to overlap the ongoing design with work on site. Through the use of Design and Build Contracts we are able to save considerable time and cost without compromising on the quality. • We provide Photorealistic visualisations of the design and also implement virtual reality presentations to begin marketing the property prior to completion. This allows us to reduce the project time and target interested buyers at an early stage.

DUE DILIGENCE

The process beings with due diligence of the development opportunity. Our due diligence consists of the following information which helps access the GDV, project timeline and Profit:

1. A Planning Review- study of the surrounding properties to understand the scope of work considered permissible by the council. We look at relevant approved and refused planning applications on the street and surrounding area. Based on this study we make an assessment of what is the most likely scenario for planning approval. We also take into account local SPD’s and frameworks.

2. Sale Prices- We do a study of all relevant sale prices on the street and immediate surrounding area. Based on the average we are able to attain a maximum sale price

3. Sold Price- We conduct a study of all relevant sold prices within a notable timeframe. Based on this we ascertain a realistic resale value for our property upon completion

4. Market Trends- we take an overview of the latest market research to determine potential upturn or downturns in the market throughout the duration of the project

5. Estate Agent Search- we determine which estate agent has sold the most properties on the street that are of a similar typology. Based on this we shortlist the top three agents we would consult. We have conversations with each agent to determine what they believe is a realistic sale price upon completion

6. Draft Plans- We create/ collect a series of sketch plans for the proposed scheme

7. Approximate construction cost- based on our experience and a discussion with a contractor, we are able to determine an estimate cost for the construction of the project

8. Consultant fee’s- we state a guideline of the consultants required and their approximate fees

9. Total Project costs- Based on the above information we are able to calculate an approximate total cost for the project 10. Anticipated profit range- based on all the data collected we are able to calculate the anticipated profit for the investors.

AGREEING THE PURCHASE

Once the shareholders agree to purchase the property, we aim to negotiate the deal. Most of the deals we bring to our investors are off-market and so there is very limited time to act. We have built a network of sources which provide us with off-market opportunities. We normally have a short timeframe within which to secure the deal once we have been informed. We are able to expedite the due-diligence to complete it within 3 days. If the project is within the required profit range we immediate pull in the contracts to our solicitors who will hold them as long as possible, to buy the investors some time to make their final decision.

LEGALS FOR PURCHASE

We work with the head of the property division at Kidd Rapinet Solicitors LLP for all Legal requirements relating to the purchase and sale of properties. We have built a strong relationship with them over the past 5 years and so are able to get matters resolved at pace which is essential for securing off-market opportunities. They are also familiar with our business structure and process which make the purchase transactions as efficient as possible. As per of our remit, we will complete all forms and applications required for the purchase of the property on behalf of the company and its shareholders. We will also facilities all necessary payments in order to exchange and complete the purchase. When considering auction properties we are able to request Kidd Rapinet to study the legal packs and provide a review from which the shareholders are able to make an informed decision.

MAKING THE NECESSARY DIRECT DEBIT ARRANGEMENTS

Once we have completed the purchase of the property we will set up all the necessary payments for council tax, electricity and gas.

CREATING AND COMPILING THE CONSULTANT CONTRACTS

We have a list of consultants which we are able to bring into our projects. We have built a team of consultants over the past 5 years which we believe offer us preferential rates and priorities our projects. We trust these consultants with the quality of their work and ability to stick to deadlines. We will coordinate all required consultants and facilitate their payments. We will also provide a detailed proposal for our services outlining our deliverable and a breakdown of the fees

DRAFT PROJECT PROGRAMME

By this stage of the process we are able to draft a project programme which we discuss with our shareholders. The programme is updated as the project evolves. The programme shows the following information:

  • The length of the project

  • Key Project milestone

  • Key days for the legal requirements

  • The Architecture and Interior programme

  • The requirements from external consultant and the approximate dates for their deliverables

  • A high level construction duration

  • An overlay of the design deliverables with the construction timeline

  • Key payment dates for Legals and consultants

  • The anticipated start of marketing

THE PROCUREMENT ROUTE

When considering the most ideal building contract for a project, initially it is important to dene the most suitable procurement method for construction. In the UK there are three choices for the procurement route- Traditional, Design and Build or Management Procurement. The choice of which route to take is dependent on a deep understanding of the project location, desired finish, timeline and shareholders requirements. There are 3 governing factors that guide the route of building procurement to be undertaken. For any shareholder the three main considerations are Time, Cost and Quality. Accessing the requirements for each of these components we can determine the most suitable procurement route and subsequently which construction contract could be most ideal. Figure 1 demonstrates how the procurement route is calculated. For the scale of our projects and complexity we typically only consider Traditional or Design and Build Procurement Routes: Traditional Procurement The design process is separate from construction and full detailed documentation is required before the project goes to site. This method provides the most cost certainty as contractors can provide accurate tenders based on a fully detailed design scheme. Another advantage of this route is that we would have a control over the design and quality of the interior scheme. The downside is that this is the lengthiest procedure due to the sequential process of design followed by construction. The route is preferred by investors who want cost certainty before construction starts- this prevents and deviations from the tender sum. Design and Build In comparison to the traditional route, design and construction are an integrated process whereby the contractor takes a more proactive role in the project. This will be a faster process than traditional procurement as design and construction can proceed in parallel and tendering can occur at an earlier design stage. This is normally at the expense of quality as it is in the hands of the contractor. The contractor is the single point of responsibility which reduces the risk to the investors. It becomes the contractor’s obligation to complete the project within a specified time, which is fixed prior to construction commencing on site. Figure 2.2 is a diagrammatic representation of this process

ARCHITECTURE AND INTERIORS DELIVERABLES

We create the architecture and interior drawings and specifications to the level required for construction of the project. We also coordinate all consultant work to form a complete tender package. Where applicable, we start the architecture work by creating a set of ‘existing’ Drawings and then a series of ‘Proposed’ drawings which are to be submitted for planning permission. Once the planning package is submitted we begin work on the detailed architecture and interior packages of work. This work typical includes but is not limited to the following:

1. Updated Planning drawings- Plans are updated in line with the interior design and structures. This will have no implication on the planning submission.

2. Structural package- We create structural layout plans which coordinates the structural requirements with our design. These will be referenced to the structural specification.

3. Finishes Plans- Showing the floor and wall finishes along with the location of general specification items

4. The general Specification- showing the general products specified inclusive of Floor finishes, radiators, ironmongery, skirting etc.

5. The kitchen design- detailed drawings for the kitchen area with reference to specifications 6. Reflected ceiling plans- These show the layout for the new lighting and electrical items. 7. Lighting Specification- This shows the selected electrical products inclusive of light fittings, switches, sockets etc.

8. Joinery package- Detailed Joinery drawings with enough detail for construction of cabinets and display shelves

9. Bathroom Design: Detailed bathroom drawings with references to sanitary specification

10. Sanitary Specification: This shows the selected sanitary products inclusive of sinks, taps, WC’s, tiles, accessories etc.

11. Finishes and Paints specification- This shows the paints to be used throughout the house. To be read in conjunction with the Finishes Plans and Bathroom drawings.

12. Appliances Specification- showing all kitchen appliances

13. Landscape design- Drawings for the landscape design for the front and rear garden.

14. Landscape specification- This includes all products specified for the landscape design

TENDERING AND NEGOTIATIONS

In order to begin the tendering process we select a list of contractors to invite to tender for the construction. The list comprises of contractors that we work with along with other local reputable contractors. For any new contractors, we visit their construction sites to inspect their quality of work prior to requesting a tender. We like to invite between three to five contractors to tender for the work. We typically divide the tender into Two Stages. The first stage of the process is based on Planning level drawings and the structural package from the engineer. With this information we are able to get an approximate cost for the Base Build. With our experience we are able to approximate the cost for the interior specification. Based on the tender returns at this stage we are able to shortlist the contractors to the preferred two that we would like to take on to the next stage. Stage two of the tender process takes place once we have compiled all the details drawings and specification for the project. At this stage the shortlisted contractors get to update their quotes and provide a final tender sum. We then present the tenders to the Investors and allow their input to assist in deciding the preferred contractor. During our tender review we will look through the quotes and see if we can detect any discrepancies or anomalies to prevent underquoting. We will also attempt to negotiate the tenders to secure the fixed price.

10) CONSTRUCTION CONTRACT Once the contractor has been selected we prepare the construction contracts. The selection of the construction contract is dependent on the chosen procurement route and also the scale of the project. For projects with a tender sum below £350,000 we recommend using the JCT Minor Works Contract. The JCT Design and build contract is very adaptable to the projects requirements. It can be used on large or smaller scale projects, but generally where detailed provisions are necessary. Under a JCT D&B contract we would stipulate that we would be ‘novated’ as the contractors architect & interior designer. We recommend using JCT contracts for the construction as they are fairly balanced for both the contractor and the investors. The price and payment structure of the contracts is based on a lump sum with interim stage or periodic payments. The provision of a lump sum payment allows for cost certainty and clauses are incorporated which will reduce the financial risk. We collect and compile all the necessary information to complete this document and will get this required signatures from the construction company.

SITE INSPECTIONS AND REPORTING

Once construction commences we have the following core responsibilities:

1. Contract Administration- By setting up a ‘Chinese Wall agreement’- the project manager is a member of the LDO team and is responsible for administering the construction contract. Their responsibility is to ensure that the contractor is following the terms agreed in the contract. The project manager’s responsibility is to ensure that the contractor is working on schedule and payments are made accordingly.

2. Site inspections- As the architects and interior designers of the project it is our responsibility to ensure that the contractor is following our detailed drawings and specifications. We organise site visits in accordance with the construction programme and payment schedule. We will review the extent and quality of work completed and report back to the project manager with our findings. We will record each site visit with photographs and create a site inspection report to be distributed to the team, if required.

3. Reporting to the Investors- Throughout the construction process we keep the investors updated on a regular basis. We share a link to our live project folder, from where the investors can log in and view the latest site inspection photographs and expenses. We also manage a live expense tracer which records any expense incurred. A snapshot of this is sent to the investors every month as part of our regular construction updates.

4. Gaining Building Control approval- We will liaise with the approved inspector and contractor to provide any necessary information in order to get the Final Certificate upon completion of the construction

COORDINATING SALES

Based on our earlier due diligence we established the best suited Estate Agent for the sale or rental of our project. We remain in constant contact with the agents during the construction. Prior to completion we negotiate their agency fees and complete the formalities so that the property can be listed as soon as it has been completed and staged for viewings. We observe the sales process throughout and update the investors on a regular basis with outcomes of viewings.

LEGALS FOR SALE

Once the sale has been agreed we coordinate the process with the Solicitors and complete all necessary documents on behalf of the investors.