Property Development Explained To Help You Get The Best Return On Your Investment
Real estate development, or property development, is a multifaceted business process encompassing activities that range from the renovation and re-lease of existing buildings to the purchase of raw land and the sale of developed land. While some educational organisations offer courses in property development, many developers who are active in the market are property entrepreneurs who have learnt the process from mentors like Bob Andersen. Enjoy his latest tips.
In the last video, we talked about locating a deal. We talked about one of the students that came up with a deal—a potential four townhouse project—and how quickly we jumped on it when we could see that the numbers were going to work.
Today, I’d like to take you through a little bit forward to the contract stage – the actual acquisition stage because that’s important as well.
What Is Real Estate Contract Like In Different States Of Australia?
I’d just like to take you through almost the last cycle. What are we doing? Well, last time we talked about building construction, and we took it right through to the end with the builder. The builder’s pretty much finished.
A little flurry of activity happens here. In fact, there are people you can get to do this for you but prices are pretty simple.
What certificates do you need at the end of construction?
The builders pretty much reached the end of construction. So at that point, you can get the private certifier in to give you a Certificate of Occupancy or a Certificate of Classification. These certificates state that a particular property can now be occupied — that someone can live in it.
Hi, Bob Andersen back again. Today, I’d like to take you through a little bit of the construction phase. What we’re talking about here is project management or construction management. It’s while the builder is building the project.
Something To Be Aware For Building Contracts
First, a little bit about building contracts.
There’s all different types of building contracts out there but most builders probably use Master Builders or an HIA contract—pretty standard stuff off the shelf.
In terms of building contracts – if you want to get one, the better; that’s probably not a bad idea before you sign a contract – a good commercial lawyer who’s familiar with building contracts or a quantity surveyor.
Quantity surveyors work with building contracts as well. So there’s a couple of experts just to get a good opinion on your contract before you sign it—always a good way to go.(Read More…)
It seems simple enough in theory. You respond to an online ad for a new property development which seems to have excellent growth prospects. You pay a small deposit bond, sometimes before construction has even started, and settlement could be years away. As time passes, the price of your investment property rises and you sell, and walking away with a tidy profit even before you have actually settled.
This is called flipping, and it’s one of the most commonly relied on investment strategies for investors who buy properties off the plan. Developers also offer incentives to those investors who intend to hold their properties after settlement, such as generous rental guarantees that ensure your investment generates positive cash flow, paying for itself while the guarantee is in place.(Read More…)
Not everybody understands the time versus money trap, but it is this very thing that will hold you back from attaining true wealth.
What is A Time Trap?
If you’re on a salary, you’re exchanging time for money. Maybe you are a consultant and charge by the hour or a doctor who charges by the consultation. No matter what, you are exchanging time for money and that’s where the real problem lies. If you want to earn more money you can only do so at the expense of time. You might be able to work overtime or perhaps on a weekend or maybe get a second job driving a cab, or packing shelves. Whatever it is, if you need to earn more money you can only do so at the expense of time. The problem is of course that you no longer have the time to enjoy the money that you now have. (Read More…)
People often ask me what are the characteristics that a property developer should have to be successful – and I would have to say the first characteristic would be to have a real passion for property. It’s this passion that will drive you on, not only when things are good but when things are going against you.
1. Property Developers Need To Be Decisive
Quite often, particularly in a hot market, you will have to make decisions quickly. Indecision will result in being too slow, thereby missing good deals. Those good deals will be taken up by those who are more decisive and able to make quick, intelligent decisions. To make those type of decisions requires confidence, and confidence comes from your knowledge base; from knowing what you are doing is correct. This knowledge base will come from your property development education. So get the very highest quality property development education you can. It should pay for itself. (Read More…)
If you haven’t been exposed to property development is quite possible that you would be carrying misconceptions. I like to call these property development myths. Without understanding these myths and having them explained to you by an experienced property developer, they may well block you from entering this highly lucrative field.
Myth 1 – You have to be wealthy to be a property developer
Nothing could be further from the truth. You don’t have to be wealthy to be a property developer but if you’re not you better learn some creative strategies that allow you to do property development with very little or none of your own money.
Some of my students are doing up to $40 million worth of property developments using none of their own money. They are simply using some of the creative strategies I have taught them. (Read More…)
When it comes to how many wealth creation strategies there are out there, you could say the sky is the limit. Is your Inbox like mine? Constantly inundated by the next and newest strategy for making money with little or no effort.
Ways To Make Money In The Property Market
Even if we limit ourselves to just property strategies, there are still so many options available to those prepared to put in the hard yards – renovating, flipping, cash flow positive, strata and sell, distressed sales, negative gearing, call options… the list goes on! The problem with having so many strategies however is that it can lead to confusion – and confusion leads to indecision and not taking action. (Read More…)
For me, “property development is simply improving the value of land and profiting from it.”
So what do I mean by improving the value of land?
We’re giving it a higher use and thereby increasing its value. Let’s look at a very easy-to-understand example:
Let’s say we have a parcel of land that can be subdivided into two lots. And once it is subdivided into two lots we’re going to build a house on each lot.
3-Stage Process In Sub-Division With Adding Value To The Land
This involves a three stage process. Firstly, we need to get a development permit to allow us to subdivide the land. Then we need to actually subdivide the land into two lots with two separate titles. And finally we need to build a house on each lot. (Read More…)