Barefoot investor Scott Pape has issued stern advice to homeowners devastated after the collapse of major construction company Porter Davis.
The construction company went bankrupt last week, leaving more than 1,700 Victorian and Houses in abandonment in Queensland.
Liquidators Grant Thornton held a webinar for Porter Davis clients on Tuesday, telling them they were trying to persuade new builders to take over their contracts.
Barefoot investor Scott Pape (pictured) advises clients to focus on “things you can control,” such as income and expenses
Thousands of families are devastated and doubt their future and whether they will ever be able to live in their dream home.
A distraught client, Colleen, wrote to the Barefoot Investor desperate for advice after she was at her wits end.
She said the experience left her “shocked, devastated, heartbroken, numb.”
Mr Pape shared some advice that would be hard for some homeowners to hear, warning them that they are in for a tough year.
“Expect it to be bad for a good year, and possibly longer,” he wrote.
“You’ll be hit by higher rents, higher debt payments, and higher costs to finish your home.”
“And it’s going to take way too much time. It’s going to take a few months to process your insurance warranty claim, but the real-time killer will find another builder to take over your project.”
Mr Pape said the pain would be exacerbated by rising spending and advised homeowners to focus on ‘things you can control’.
“So focus on the things you can control: your income, your expenses, and most importantly, your relationship — in what’s going to be a very difficult year for both of you,” he wrote.
He then referred to a comment by Hutchinson Builders Chairman Scott Hutchinson about the dire situation for the construction industry in the country.
“Current conditions are appalling. It is ridiculous. I’ve never seen it like this,” Mr. Hutchinson told News Corp.
“More builders will go bankrupt. Governments can do nothing. People just shouldn’t build… I don’t think people should build privately.’
Mr Pape responded to the alarming comment, writing: ‘That’s a bloody big decision! Buyer (and builder) beware!’
Major construction company Porter Davis went bankrupt last week, leaving more than 1,700 homes in the lurch (pictured, a partially completed house in Brisbane)
Grant Thornton liquidator Said Jahani urged customers to be patient in the webinar, saying the organization would know within a week if Porter Davis would be sold.
“The plan was to find a builder or builders who could step in and take over contracts,” he said.
“The reality is we just don’t have the luxury of letting this process drag on for weeks or months.”
Liquidators hoped they could get clients’ homes built faster if they went through insurers, as both Queensland and Victoria have state-backed guarantee insurance policies.
But Mr Jahani added that there was ‘no guarantee that the process could be speeded up’.
To add to the customer’s pain, he added that some people did not have insurance and could lose their deposit.
“They fell into a gap between paying a bail to Porter Davis and not having an insurance policy until weeks or months later when a license was obtained,” he said.
“In the extreme case, it means you have no insurance coverage and you lose the deposit you paid.”
About 240 clients have properties that are essentially ready for delivery and liquidators have been looking for a quick fix for the remaining work and certificate of occupancy.
“Remaining customers whose homes have not yet started or are in the lock-up phase should look for other builders,” Mr Jahani said.
He added that Grant Thornton was investigating whether Porter Davis acted while insolvent and “whether that meant they were doing wrong by clients.”