Develop Something New or Buy Something Old?

Saving money is a good thing right? Especially when you’re talking about a lot of it.

It’s a mindset that goes across most walks of life and pretty much every business, including property developing on every level from private homes to international hotel chains.

One thing most developers, big and small, don’t factor in to the equation however, is time.

How valuable is that?

Consider this. It takes somewhere between 18 – 24 months for the whole process, that’s from buying the land, getting the licenses, clearing the land, engaging the architects, sourcing the contractors and hiring/firing/hiring the builders to eventually topping off and cracking the first bottle of champagne, before you can congratulate yourself on finally building your dream home or hotel.

The questions to be asking yourself are:

1.   Is that an amount of time you’re prepared to accept as non-revenue generating?

2.   Can you really afford it? Both financially and time-wise?

3.   Does it really make sense to your head and your wallet?

Buying an existing business or property can be much easier.

It may take just a few weeks to get things how you want them, either operationally or with renovations but at least you’ll have cash flow from the beginning, which in a lot of cases is better for you.

In terms of time, buying something old wins.

Let’s get real about this.

A contractor and development is likely to go through three phases, which you should be prepared for:

1. Soft Cash

A contractor is going to propose an amount to build your home or hotel. This is rarely an accurate amount because prices for materials and labour can, and often do, change over the course of time it takes to build.

Contractors are also looking for your business and they know price is a very important factor in that. They know if their quote is too high it will be ignored, so they keep them low to secure the work.

Be aware, in attempts to stick to budgets it’s not unusual for contractors to cut corners.

2. Realistic Cash

From my experience this is normally around 15-20% above the contractor’s initial quotation and what you’ll actually end up paying.

If you’re prepared for that all well and good.

3. Hard Cash

On rare occasions actual expenses can be as much as 30-40% over budget! That can seriously kick into savings and cash flows and turn dreams into nightmares.

Be aware, when projects hit the 30% over-budget mark, buyers’ remorse often kicks in and the thoughts of buying the existing business or villa next door begin to grow stronger by the day.

Then what do you do? Call it a day? Or bite the bullet and continue, knowing it’s going to take a lot longer to get the returns on your investment.

Maybe you have both the time and money to invest in the land and build options. If you do there are some great opportunities to be had and they’re available now.

Of course, the final decision is yours. But my advice is to make the decision with as much knowledge as you can because information is more valuable than anything.

First published in Gapura Bali.

Seven Stones Indonesia is a property company headquartered in Bali, Indonesia, with a mission to help people who are interested in buying and selling residential and commercial real estate.

If you’re thinking about property, ROI, capital gains or lifestyle investments in Bali, Jakarta, Surabaya, and Indonesian’s Eastern Islands and need some friendly advice and guidance then why not email or check out Seven Stones Website | Seven Stones Linkedin | Seven Stones Facebook

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Andrzej Barski

Director of Seven Stones Indonesia

Andrzej is Co-owner/ Founder and Director of Seven Stones Indonesia. He was born in the UK to Polish parents and has been living in Indonesia for more than 33-years. He is a skilled writer, trainer and marketer with a deep understanding of Indonesia and its many cultures after spending many years travelling across the archipelago from North Sumatra to Irian Jaya.

His experience covers Marketing, Branding, Advertising, Publishing, Real Estate and Training for 5-Star Hotels and Resorts in Bali and Jakarta, which has given him a passion for the customer experience. He’s a published author and a regular contributor to local and regional publications. His interests include conservation, eco-conscious initiatives, spirituality and motorcycles. Andrzej speaks English and Indonesian.

Terje H. Nilsen

Director of Seven Stones Indonesia

Terje is from Norway and has been living in Indonesia for over 20-years. He first came to Indonesia as a child and after earning his degree in Business Administration from the University of Agder in Norway, he moved to Indonesia in 1993, where he has worked in leading positions in education and the fitness/ wellness industries all over Indonesia including Jakarta, Banjarmasin, Medan and Bali.

He was Co-owner and CEO of the Paradise Property Group for 10-years and led the company to great success. He is now Co-owner/ Founder and Director of Seven Stones Indonesia offering market entry services for foreign investors, legal advice, sourcing of investments and in particular real estate investments. He has a soft spot for eco-friendly and socially sustainable projects and investments, while his personal business strengths are in property law, tourism trends, macroeconomics, Indonesian government and regulations. His personal interests are in sport, adventure, history and spiritual experiences.

Terje’s leadership, drive and knowledge are recognised across many industries and his unrivalled network of high level contacts in government and business spans the globe. He believes you do good and do well but always in that order. Terje speaks English, Indonesian and Norwegian.

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Ridwan Jasin Zachrie

CFO of Seven Stones Indonesia, Jakarta

Ridwan is one of Indonesia’s top executives with a long and illustrious career in the financial world. He holds several professional certifications including being a Certified Business Valuer (CBV) issued by the Australian Academy of Finance and Management; Broker-Dealer Representative (WPPE); and The Directorship Certification for Directors and Commissioners, issued by the Indonesian Institute of Commissioners and Directors.

His experience includes being the Managing Director at one of the top investment banking groups in the region, the Recapital Group, the CFO at State-owned enterprises in fishery industry and the CEO at Tanri Abeng & Son Holding. He’s also been an Independent Commissioner in several Financial Service companies and on the Audit and Risk Committee at Bank BTPN Tbk, Berau Coal Energy Tbk, Aetra Air Jakarta as well as working for Citibank, Bank Mandiri and HSBC. His last position was as CFO at PT Citra Putra Mandiri – OSO Group.

Ridwan has won a number of prestigious awards including the Best CFO Awards 2019 (Institute of Certified Management Accountant Australia-Indonesia); Asia Pacific Young Business Leader awarded by Asia 21 Network New York USA (Tokyo 2008); UK Alumni Business Awards 2008 awarded by the British Council; and The Most Inspiring Human Resources Practitioners’ version of Human Capital Magazine 2010.

He’s a member of the Board of Trustees of the Alumni Association of the Faculty of Law, Trisakti University, Co-Founder of the Paramadina Public Policy Institute and actively writes books, publications and articles in the mass media. He co-authored “Korupsi Mengorupsi Indonesia” in 2009, which helps those with an interest in understanding governance in Indonesia and the critical issue of corruption. Ridwan speaks Indonesian and English.

Per Fredrik Ecker

Managing Director of Seven Stones Indonesia, Jakarta

Per is the Managing Director of the Seven Stones Indonesia (SSI) Jakarta office and has more than 25-years’ experience in Indonesia, China, and Western Europe. He previously worked in senior management positions with Q-Free ASA, Siemens AG, and other companies in the telecom sector. Over the last six years, he has been the Chairman of the Indonesia-Norway Business Council (INBC) and recently become elected to be on the board of EuroCham Indonesia.

His most recent experience is within Intelligent Transport Solutions (ITS), Telecom, and other sectors within the Indonesian market. He is today through his position in SSI and by representing Norway Connect, promoting Nordic and European companies that would like to explore business opportunities in the Indonesian market. He’s also playing an active role to help create the Nordic House concept in Jakarta that will provide an excellent platform for Nordic companies entering Indonesia, where they’ll find a community that can offer support with trusted information and affordable services to enter this market.