How do you profit from property development, what costs are involved, & why should you follow Bob Andersen’s footsteps?
Hi! Bob Andersen back again. In this episode, I’m going to take you through the really exciting stuff. It’s the numbers. At the end of the day, nothing else matters but the numbers.
So we’ve been talking about the four townhouse project. Obviously, there are lots of little costs involved in any property development project. But I’ll just take you through what I call the “major hittings”.
So the sale price of the four townhouses came in at $2,763,000. Before the property was developed, it had a three-bedroom townhouse that sold in the high 600s and a couple of four-bedroom townhouses that sold in the lowest 700s. Of course, we have to take the cost off that to work out our profit.
THE PRE-DEVELOPMENT COSTS
These prices that I’m talking about right now do not include GST. I’ll treat GST separately.
The Land
The purchase price including labels and stamp duty that came in at $782,000. Another big number cost is the construction. So, these are well fitted and bigger than usual, the construction price came in at $1,128,000.
Professional Fees
As you know, we’ve got quite a few professionals in there like architects, town planners, engineers, and certifiers. The total price of those is $56,000.
Council Contributions
Now, contributions as I mentioned in one of the early episodes, varies enormously from council to council. For this development project, the costs have a total of $105,000.
Other Finances and Frees
Finance can’t get away from that. The big ticket on finance is, of course, the interest. Also, application fees, valuation fees, those sorts of things. Our finance came in at $108,000. I’m going to sell them, of course, and we got agents’ fees and a little bit of advertising in there at $76,000.
The GST Component
The difference between GST on the sales, less the GST we got back on our cost. The total GST component was $66,000. And then there are little bits in pieces like miscellaneous things, some rights, some legal things on the side. That totalled $18,000.
So, all together, if you add up all those costs and take them off the sale price, you can have a profit of $424,000.
YOUR SELLING OPTIONS
Now, as I’ve said before there are townhouses around the cities that sell for an average of $100,000 a townhouse. So if you like, you can sell for $106,000 a townhouse. That’s pretty good. That’s $424,000 for pretty much a part-time job.
Yes, our work is very much a part-time job for $424,000. And that either about 18 to 20-month period of getting the approvals and getting the thing built. It’s a pretty good part-time job if you ask me. So if you can make that sort of money from a relatively small project, why would you want to keep your day job? Why would you want to do your day job forever?
WHY PROPERTY DEVELOPMENT?
So my recommendation to you is to learn how to do property development projects and have a look at making a transition from your day job to development. But don’t do that immediately. Keep your day job, do one or two projects along the way while you’re at the day job and make that transition.
Make a lot more money, 3, 4, 5, 6 or 10 times as much as Australian full-time wage with one day a week, two days a week depending on how many projects you are doing. That’s where you need to be. That’s where you’re going to make money. It’s where you’re going to accumulate a great property portfolio using the properties that you hold and having a great amount of cash flow.
That’s for lifestyle, too! That’s for holidays and cars and houses and kids’ education, whatever else you want to use. You won’t do it anywhere else. There’s no other property strategy where you can make this much money in such a small amount of time and effort.
But you have to learn the ropes. You have to know what to do, you have to know how to manage people and managing prices. That’s what I do. That’s what I teach. I’m a millionaire maker. I make millionaires out of students that get involved in this and do it well and really pick it up. I have a whole range of strategies that you can use even if you have a very little money or even no money at all.
But what you need to do is to get this off along to where you hear me speaking. Come along to one of my events where you know I’m going to speak. Have a listen, and make up your mind. Is it for you? And come on board. Come with me and I’ll show you how to do all these.
I’ve hoped you find this series really exciting. I’ve hoped you find it enjoyable and I’ll look forward to seeing you personally at one of my events soon and who knows? You could be the next property development millionaire.
It’s Bob Andersen saying bye for now.
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