What Makes Property Developing The Best Strategy?
Real estate developing is one of the few areas a person can enter with little expertise and become wealthy in a relatively short amount of time.
- You can manufacture equity independent to what’s happening in the market.
- You can sell off part of your development to own your remaining property without debt.
- You can boost rental yields to create more positive cashflow.
- You can accumulate property faster and accelerate your portfolio growth.
- You can use other people’s money to create wealth.
- You can do it in your spare time.
- You can choose from many different strategies to make money based on your situation.
- Many on our nation’s rich list made their money through property development.
- It’s no longer the domain of the rich – anyone can do it if you understand how.
# 1 – DA Uplift
Builders need ongoing projects to keep their workers employed and are on the constant lookout for ready to build sites to save time and holding costs.
This opens the door to acquiring property, obtaining development approvals and then on-selling it to builders for a tidy profit.
You can even acquire the property with minimal outlay using creative instruments such as options and leasing.
# 2 – Sub-Division
When you subdivide one property into many you can add significant value in the process.
You then have the option to hold the lots and wait for more uplift, build on the vacant lots and/or sell one of the properties to pay down your debt and increase your equity and rental yields.
This approach is simple and low risk when you understand the process and what to look out for.
# 3 – Residential Unit Development
Residential unit development has a potentially lower financial requirement compared to commercial, industrial or retail development.
Many residential unit developers sell some of their units after completion to pay down their debt, effectively allowing them to own the remaining units outright.
You can repeat this process to acquire several millions in property and hundreds of thousands in positive cashflow to effectively retire on.
Key Benefits of Property Developing
As a developer, you aim to complete your projects at 20% or more below market value.
Boost Rental Yields
You can sell part of your project to pay down equity and increase your cash flow.
Increase Tax Benefits
You can claim more depreciation and tax benefits from developing a new property.
Developers can regularly make upwards of 6-figures from just one small development.
You only need to spend a few hours a week to manage your project.
Obtain Easier Finance
You have many finance options available to you and can invest with or without the banks.
Real-Life Small Developments Case Stories of our Students
Case Study – $170K projected profit from Subdivide, renovate, build and sell
Purchase Price: $286K
Strategy: DGI Graduate bought derelict hail damaged house with asbestos on sub-divisible block. To subdivide, the DA requirement for Dual Occupancy was to build on the subdivided block – i.e. she could not subdivide the block to sell as vacant land.
Result: She renovated the derelict house and moved into it so she is close to project of building on the back block. She will sell reno’d house for $400K and build the other one for $450K, looking at a projected profit of $170K.
Case Study – $333K Profit from Subdivide, renovate, build and sell
Purchase Price: $760K
Strategy: House is pre-war so cannot be moved. Owners are converting the house into 2 townhouses and building 3 more townhouses on the back of the block. They have a DA and are doing the whole development.
Result: The owners are looking for a project profit of $333,302.
Real Life Success Stories
Alanah and Rob, New South Wales