Great question Mini. We have already discussed the risks of proeprty development in another post so let’s look at the benefits of becoming a property developer

1.Savings – rather than buying properties at retail, you can acquire your investments 15- 20% below their market cost. You don’t pay developer’s margin, agent’s commission, GST, marketing and other costs usually included in the price of buying real estate.

2.Profits – at the correct time in the market you can make good profits selling your development projects.

3.Easier finance – once you have completed your development project you can approach banks to re mortgage your properties. They will usually lend you around 80% of their retail value when completed. In many instances this is around about what it cost you to develop your project and you can take out your initial equity. In other words it’s a bit like borrowing 100% of the cost of the property or the classic “nothing down.”

4.Following on from the above point you get massive leverage when you have completed the development project because you control a substantial property (or 2 or 3) with little capital required as equity.

5.Tax Benefits– owing a new property gives you all the benefits of depreciation allowances.

6.Higher rental return –your tenants will pay the retail rents. They won’t know that your cost for your property was substantially below the retail price. This means your rental yields will be higher than for someone who bought their property at market value.

7.Security – if done properly development can be very lucrative. If you buy your development site well you are underpinned by the security of real estate in a prime position.

I’m sure other contributors will come up with others

Michael Yardney
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Hi Checker

Thanks for the kind words. I understand exactly what you are getting at.

I have been involved in property for 30 years (tha’s giving away my age[blush2] but I only started doing seminars about 5 years ago becuase of people like Henry Kay.

He was giving a lot of “misinformation” so I started my “Real World” real estate workshops to give real wrold advice.

For a number of years I have been warning about the slowdown we are curently in. This year I am explaining the lessons I have learned for the 4 property cycles I have traded and invested through

Michael Yardney
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I have read similar things.

The ATO knows who buys and who sells properties and expects their tax returns to reflect this.

Do you know someone who hasn’t been truthful in their tax returns?[blink]

Michael Yardney
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The homework you are doing is important preliminary research, but no where near as important as some other factors when choosing a location in which to invest.

Find areas that havea history of long term strong capital growth.

Lokk for suburbs in transition, suburbs that are changing in nature as new generations move in as the older people leave. Look for areas where property values are likley to increase as these young people change the nature of the area with renovations or new developments.

Find areas where there is a strong demand by tenants.

Good luck with your investing

Michael Yardney
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I understand your viewpoint and can see that it makes sense from your perspective.

As I mentioned in a previous post I do run an expensive workshop once a year and it is only available to a small group of 80 attendees due to the interactive style of the event.

http://www.metropoleprojects.com.au/html/s02_article/article_view.asp?art_id=107

Last year in the fornt row was one gentleman who owned 20 properties. I had the Reno Kings come and pay to attend. they are multimillionaiers in their own right and run their own seminars.

I had serious property people there, accountants and solicitors. Most people had huge nett worths.

They must know something about paying for good information. that’spossibly how they got weathy.

And while most beginning investors probably thought like you and wouldn’t pay more that $60 for advice;those 20 or so who were “brave enough” to take the punt and did pay over $3,000 couldn’t believe the value they got.

I’ve got their testimonials on CD would be happy to mail them to anyone who is interested.

Michael Yardney
METROPOLE PROPERTIES
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You can buy this information from residex

http://www.residex.com.au

Michael Yardney
METROPOLE PROPERTIES
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Reggie

What state are you in.

I know some good ones in Melbourne

Michael Yardney
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There will probabaly be an hourly charge that should be set on in the schedule of fees when you signed your management agreement

Michael Yardney
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I think resiwealth’s point was not to buy ex Henry Kay stock, but to take advantage of the opportunities that may arise in the market.

Let’s be clear….we don’t want to take advantage of people, but certain opportunities that arise.

At least twice a week I have investors ring me asking whether they should sell. Invariably they have overextended themselves and now have negative gearing and can’t see their properties go up as promised by whoever sold it to the (not us!)They are questioning their investment decisions.

If our agency (www.rentingmelbourne.com.au)was a normal agency we would advise them to sell because that’s how estate agents make their money…. selling property.

We suggest that real estate is a long term investment and not to sell to the bargain hunters.

Anyway….

What this means is that a lot of mum and dad investors (who buy and sell on emotion and gut feel rather than based on research and considered opinion)are putting their properties on the market.

Some are great buys and worth purchasing (which we are doing for our clients (www.buyingmelbourne.com.au)

But remember that the banks and valuers are very conservative at present and they also recognise that the “market value” of many properties has fallen.

So while it is a good time to buy the right property, it is even more important than ever to do your market research, and get the price right. Go in their and make some cheeky offers and if you don’t get the property at the right price, move on.

Otherwise you could be embarrassed by the valuation you receive and the bargain you thought you bought may not be a bargain at all.

Michael Yardney
METROPOLE PROPERTIES
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Thanks for the plug Shelley

You are correct that Jack Henderson who runs our buyers advocacy service http://www.buyingmelbourne.com.au
is very experienced – knows everyone in the industry and is very client focussed, lots of research and no hard sell

Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
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