Shane’s Development Profit is $350,000 plus a block of Land
Step 1: Getting Started
I have always loved property and was looking to learn more about real estate strategies. I went to a one day preview with Mark Rolton in Adelaide and knew I had to attend Property Options and learn everything I could. I attended the three day live weekend and soaked in all the information I could. I decided then and there that development was my future so I attended Conclave and put into motion the plan to become a developer.
Step 2: Find the Deal
I made RPdata my friend as I eagerly looked for a site that would be suitable for a subdivision. I came across a large block in an area outside the CBD that was able to be subdivided into house blocks. After speaking with council I knew my vision for a housing estate could be a reality.
I didn’t have the cash up front to do the development myself, so I had to get creative. I met with the owner and build a great relationship with them. We decided it was in our best interests to JV together and see this deal through as there was great profit to be made for both of us.
Step 3: Choosing the Right Strategy – Development
The development approval was lodged with council for a 19 block subdivision. It was approved by council and while this was occurring I started working on my pre-sales. The owner was keen to retain 3 of the blocks – which was fantastic because they are part of my presales and I was keeping a block too – so we already have 4 presales before we started.
It was full steam ahead as we engaged a real estate agent and produced a brochure to move the stock. It’s been great to put the plan into action and over half the estate has already been sold. The owner of the property wanted to retain three of the blocks of land and I am keeping one – so we began the project with four pre-sales which has been an added bonus.
Step 4: Know the Numbers
As I was joint venturing with the land owner I struck a vendor finance model with them which meant I didn’t have to pay my half of the costs until the profit was realised. This meant I could complete the works without having to worry about my cash flow.
- Option Price – $315,000
- Stamp Duty – $19,350
- Services to Block – $490,000
- Development Costs – $373,000
- Commissions to Agents – $59,000
- Total Development Costs – $882,350
- Gross Realisation – $1,586,000
- Profit – $350,000 + block of land
It’s been incredibly rewarding to take on the role of the developer. I’ve enjoyed the entire process of the development approval with council right through to marketing and I know with certainty that development is my blood. There are lucrative profits to be made and I’m looking forward to my next development.