Buying and restoring properties overseas can be a pleasure and indeed very rewarding, if executed properly, but it can also be a nightmare, if not managed well.
We are seeing a great deal of interest in buying properties to restore at present. I believe that this is because the initial outlay clearly is significantly lower than buying a finished product and given that we are yet to emerge from this crisis, here in Italy, it is more palatable as costs are, therefore, spread over a longer period, usually 18 months or 2 years, depending on the size of the project.
By the time the project is completed the market should, in theory, be more buoyant and you will have not only created value in the process but will have created exactly you want rather than having the associated costs of modifying something that you have bought, already fully priced, that is not exactly to your taste.
Points to consider;
- Engage someone who is qualified to manage the risk from start to finish. Project management is actually risk management.
- A clearly defined brief at the outset is essential to achieve success.
- Try to buy in a prime location that will be easy to liquidate if your situation changes overnight.
- With regard to the restoration process engage a Project Manager that will take full responsibility for the project to ensure that quality standards, timeframes and budgets are adhered to.
- Insist upon contracts with the Geometra/Architect and the General Contractor being reviewed by the Project Manager before signature.
All costs should be clearly specified in the contracts.
You then have only one point of contact and if something goes wrong. You are not left to negotiate with all the suppliers, many of which will not speak your language.
- Ensure that whichever Company you choose has a proven track record, you have seen the product and you have spoken to their clients or seen testimonials.
- Take sufficient time to plan the project carefully and try to freeze the specification before you break earth or move the first brick. This will eliminate the possibility of surprises later on in the project. Insist upon a clearly defined quotation illustrating each and every aspect of the project, in your own language or in English as a minimum. Also insist on a full description of works being undertaken with types of materials being illustrated.
- Insist upon a Cronoprogram ( Gantt Chart )that illustrates clearly what is going to take place each and every month for the life of the project, start to finish. In order that you may follow the progress.
The Gantt Chart should have a decision time-line ie. when you need to make decisions throughout the project cycle, a fiscal time-line ie. when you need to make payments and how much they are.
- Regarding payments the Project Manager should furnish the bank with a copy of the Gantt Chart in order that the bank knows precisely what payments are being made each and every month.
The Project Manager should review monthly invoices and send them to you for Payment and be present at the bank when monthly payments are made.
Normally a 7% deposit is taken and then the balance is divided equally each and every month minus a portion each and every month of the deposit taken.
The final payment should only be made when the project is completed and you are completely satisfied.
- If you do wish to modify any aspect of the project at any point during the life of the project, ensure that you receive a variation schedule, which clearly states the cost implication, plus or minus, and sign this off together with the company who is responsible. Then ask the Geometra or General Contractor to prepare a new Cronoprogram, ( Gantt Chart ), incorporating the changes. This, must be signed, by all parties.
11. Insist upon photos with text illustrating the progress twice a week enabling you to reconcile the position with the Cronoprogram ( Gantt Chart ) and the description of works that you have been given and signed.
- Insist upon calls at least twice a week to discuss progress to confirm that everything is on track.
If you follow this simple procedure it should ensure that what you have engaged in is what you will get at the end of the project life and the project should finish on time and on budget.
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