There are few things more complicated during a property development than the builder going bust during the construction phase of a project. It puts you in a very precarious position and becomes very tricky to navigate. So many issues have to be resolved and the whole process can be very stressful and time consuming.
This is exactly what happened with property developer and development financier Dan Holden from Holden Capital. During a construction phase his builder went bust through no fault of his project, and he had to scramble to fix it. I have also had my own issues with a builder facing difficulties during a building phase, so have some experience of what it is like to wonder if the building will ever be finished.
Given all the turmoil in the building industry over the past few years, we look at how you can protect yourself for a building disaster and set your project up for construction success.
In this episode, Dan and I discuss:
The current state of the lending market and what it means for developers
How to protect yourself from the chaos caused by a builder collapse
What to look out for in a builder’s contract (and when to step in)
How to mitigate risk during construction: warning signs, cost escalation, supply chain issues, and more
The critical role of risk management in today’s turbulent building industry
Property Development Training
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If you're ready to take control of your development journey, check out my Property Developer Training. This step-by-step course covers everything from finding a site to running feasibilities and successfully completing a small-scale development. You'll learn how to avoid the pitfalls I’ve faced and set yourself up for success.
New Course: Building Blueprint – Navigating Construction During Turbulent Times
To help you successfully navigate the construction phase of any project, I’ve added a brand new, standalone course included with the Property Developer Training called Building Blueprint: Tactics for Navigating Construction During Turbulent Times. This course dives deep into construction contracts, common building pitfalls, and how to mitigate risks during the construction phase.
So head over to propertydevelopertraining.com and take a look... I would love to see you on the inside...
Property Developer Quiz
Ready to find out if you’re ready to become a developer?
Take the free Property Developer Quiz and see where you stand. Whether you're just starting or already working on projects, this quiz will help you assess your readiness and point out any gaps in your development knowledge.
Take the free Property Developer Quiz (https://www.propertydevelopertraining.com/quiz) and get a sense of where you are at…
Free book - Discover the secrets of a Million Dollar Property Developer
Grab Your Free Book: "Become a Million Dollar Property Developer"
Want to know how I delivered a 20-townhouse project on my first development? Grab a free copy of my book, Become a Million Dollar Property Developer, where I share the lessons I learned—and how you can apply them to your own projects.
Grab a free copy of my popular book Become a Million Dollar Property Developer about my journey into property development at https://www.propertydevelopertraining.com/digital_book.
Social Connection
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Links
Holden Capital - https://www.holdencapital.com.au/
Book: Constructive Finance - https://www.holdencapital.com.au/store/constructive-finance-insight-into-the-world-of-australian-construction-finance
Episode summary
Justin:Welcome to episode 114 of the Property Developer Podcast! I'm your host, Justin Gehde. It's been a little while since our last episode, and let me tell you, it’s been quite the busy few months for me. We’ve sold and moved into a new home, and on top of that, my dad had a major stroke, which was incredibly stressful. But we’re back now, and in today’s episode, we’re diving into an important topic—what happens when things go wrong during the construction phase of a property development project.
Joining me today is Dan Holden from Holden Capital. Dan has years of experience lending to property developers, and he’s here to share his insights into the current lending landscape and, of course, the challenges developers face when construction doesn’t go according to plan.
Dan, great to have you back! Let’s get straight into it. Can you share with us what you’ve been working on lately?
Dan:Thanks for having me back, Justin. Over the past 12 months, it’s been a bit of a rollercoaster. We’ve had some challenging times with cost escalations, builders struggling with resources, and delays due to material shortages. But we’ve kept things steady, focusing on doing less but doing it safely. Our portfolio right now includes a lot of smaller-scale projects in Southeast Queensland, and we’ve seen some pretty solid results.
Justin:It’s great to hear that you’re staying strong despite the challenges. So, what’s been your experience with projects that have faced setbacks during construction?
Dan:Well, time delays are the silent killer. In the past 18 months, we’ve seen projects suffer not just because of cost overruns but because they’ve stretched far beyond their original timelines. For example, one of our projects in Sydney was supposed to take 18 months, but it ended up taking nearly 30 months! That kind of delay can cause serious financial strain on developers.
Justin:Wow, 30 months on an 18-month project—that’s a massive issue. And I know this firsthand. I’ve had my own experience with construction delays, especially with the builder I was working with. So, Dan, from a lender’s perspective, how do you manage when things go off track on a project?
Dan:From our standpoint, it’s all about communication. If a developer reaches out to us when things are starting to go off course, we can work together to come up with a solution. But too often, we see developers avoid confrontation, thinking they can just push through the issues. What often happens is they end up escalating the problem without realizing it. The key is staying involved, maintaining those open lines of communication, and making decisions quickly to keep things moving.
Justin:I agree. It’s all about having a proactive approach. So, when it comes to choosing the right builder and managing those relationships, what’s your advice?
Dan:A big part of the problem is that developers sometimes don’t take enough time to properly vet their builders. It's not just about getting the cheapest quote—it’s about the builder’s capacity, track record, and their resources. If a builder is already stretched thin with multiple projects, that’s a red flag. You need to be able to trust them to stick to timelines, manage their team, and work within your budget.
Justin:That’s a great point. It’s so tempting to just choose the lowest bid, but if the builder can’t deliver, that’s going to cost you in the long run. And you mentioned trust—can you elaborate on how important it is to maintain trust between the developer and builder?
Dan:Trust is everything. I’ve seen developers who, toward the end of the project, start fighting over small variations or issues. They get fixated on saving a few bucks when in reality, the delays and frustration are costing them far more. It's much better to approach the situation collaboratively and find a solution together. The best developers I’ve seen don’t just focus on the end result—they focus on the relationship throughout the entire process.
Justin:Absolutely. The way you handle these situations can make or break the project. So, in your experience, what are some key takeaways that developers should keep in mind when they’re looking to avoid construction issues?
Dan:First, plan early and get the right team in place. Engage a quantity surveyor, work with experienced builders, and get legal advice before signing contracts. Second, stay engaged. Don’t just sit back and hope everything will go smoothly. Get on-site, check in regularly, and maintain clear communication with your builder. Third, be prepared to make decisions quickly. Indecision leads to delays. Lastly, make sure your contracts are solid, especially when it comes to timeframes and penalties for delays.
Justin:I couldn’t agree more. Well, Dan, thank you so much for sharing your insights today. You’ve really highlighted the importance of building strong relationships and being proactive when it comes to construction.
Dan:Thanks, Justin. It’s always great to chat, and I hope this helps some developers avoid the mistakes we’ve seen in the past.
Justin:Absolutely. And to all of our listeners, if you want to dive deeper into the construction phase and learn more about how to make your building process a success, check out the Building Blueprint course on my Property Developer Training site at www.propertydevelopertraining.com It’s filled with lessons learned from my own projects to help you avoid costly mistakes.
