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UncleKev

Becoming A Property Mogul

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Great news. Happy days are here again :lol:

http://www.news.com.au/business/money/stor...5013951,00.html

Becoming a property mogul

THERE'S no doubt property development is a big, lucrative business. You only have to scan the rich lists from around the world to see the number of multi-billionaires who made their fortunes from property.

Australia is no exception, and many of our wealthiest people made their first million dollars using property.

So where does a budding property developer start?

And budding doesn’t necessarily mean young.

More older Australians are expected to turn to property development and renovation following the recent cut to superannuation deposit limits.

According to the Australian Institute of Architects advice service, Archicentre, cutting the maximum $100,000 super contribution limit to $50,000 is likely to result in a surge in renovation and development activity by baby boomers

Renovating the family home offers a trifecta benefit for these soon-to-be retirees, Archicentre managing director Robert Caulfield says.

Not only does it immediately offer them a better lifestyle and place to live, but investing in the family home is also exempt from capital gains tax.

Renovating for profit

Regardless of age group, renovating for profit requires research and expertise.

"Homeowners need to recognise that renovating for profit is similar to running a business, where costs and profits need to be managed accurately and constantly monitored," Caulfield says.

One of the biggest problems is buying the wrong house or in the wrong location."

Buying a "lemon" can add tens of thousands of dollars to the redevelopment cost, which can quickly wipe out profits.

Buying in the wrong location can mean that no matter how good the redevelopment is, the number of buyers will be limited.

"Another problem is if the property, either structurally or by its design, is not suitable for renovation," Caulfield says.

This means checking with local governments to ensure the type of development you propose will be allowed.

Finances Financing a development is another hurdle.

The Mortgage and Finance Association of Australia says developing a long-term relationship with your lender is vital to keep operations going during buying, renovating, developing and selling.

"There’s nothing worse than a situation where you need money to renovate a property or purchase another one and you don’t have a lender who is the full bottle on your objectives," MFAA chief executive Phil Naylor says.

"Credit is definitely harder to get now, but if you develop a good relationship you are in a better position to explain why you want the funds and how you’re going to use them."

Most lenders do not lend anywhere near 80 or 90 per cent of the value for a residential development, as they do with a purchase.

Changing market

Forty-year veteran property investor and Portfolio Management Services director Jock Bing says many would-be developers are priced out of the market by eager first-home buyers and investors.

‘‘The six-pack man, as we used to call them �" people who go around looking for small blocks of units to do up �" just can’t seem to get a look in. They’re being priced out by first-home buyers who are buying up almost everything they can get,’’ Bing says.

"The problem with developing is that you need to make a good profit margin for the extra risk and costs you have."

Know your subject

Property development is now becoming more accessible with research tools such as RP Data and education readily available, property developer, educator and founder of CCORP Carly Crutchfield says.

Her top five tips are:

• Research �" Get to know the area. It is important to know the current trends for the area, planned and future infrastructure, and also who is likely to buy in the area.

• Negotiating �" Almost every cost involved in property development is negotiable and people often don’t understand the fact that negotiation can be what makes or breaks a deal.

• Create a winning situation �" Create good relationships with the vendor of the property as well as other team members involved in the sale.

Knowing what the vendor’s requirements are puts you in a better position to negotiate a much better deal.

• Feasibility �" Learn how to devise a professional feasibility, including all costs, so you can get an idea what the potential profits can be.

You can download a free feasibility calculator from www.ccorp.com.au.

• Team work �" Know what kind of professionals you might need and allow them to do their work.

Source: www.ccorp.com.au and www.cdevelop.com.au.

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Becoming A Property Mogul is always a sure way to get rich.

If you do it at the right time.

Now isn't the right time.

Neither is next year.

To be honest, 2011 and 2012 arn't looking too good either.

Edited by TaxAbuserOfTheWeek

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Becoming A Property Mogul is a;ways a sure way to get rich.

If you do it at the right time.

Now isn't the right time.

Neither is next year.

2011 and 2012 arn't looking too good either.

The host organism has to be 'ready' to accept the parasite

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Great news. Happy days are here again :lol:

http://www.news.com.au/business/money/stor...5013951,00.html

Becoming a property mogul

Bing [/url] says many would-be developers are priced out of the market by eager first-home buyers and investors.

As opposed to many first-home buyers being priced out of the market by would-be developers over here?

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