26 Apr Property Development As a Wealth Creation Strategy
When it comes to wealth creation there seems to be an endless array of opportunities. I don’t know about your Inbox but mine gets peppered every day with the latest new thing for creating wealth.
But there’s something unique about property. It is primal. Before crypto currency, before stocks, before gold there was property – land ownership. Empires have been built, wars waged – over property.
Even those who have built wealth in other areas usually store much of it in property. For investors it has proven to be a tax effective long-term strategy for building wealth. But for those less patient, those wanting to enjoy the fruits of their labour earlier, it is simply too slow.
Enter the property entrepreneur. The one willing to take charge of their future. Their intention – to use property as their chosen asset class, but to value add to create a higher return in a shorter time.
One common example is to add quick value by renovating, but when it comes to creating large financial gains from real estate one strategy stands head and shoulders above all others – Property Development.
The beauty of property development is the flexibility of being able to sell some of the finished product to create cashflow and to hold some as an investment to build substantial long-term wealth. To obtain true wealth, and the financial freedom and lifestyle that comes as a result, requires both cashflow and an expanding property portfolio.
Cashflow is derived from the profit made when the finished product is sold. We need cashflow for our day to day expenses and to fuel our lifestyle – cars, boats, holidays. Long-term wealth is created by holding income producing real estate long term. Because developers create their investments at absolute raw cost they can build a cashflow positive property portfolio very fast.
With the average profit from just one townhouse being about $120,000 to $150,000 it’s not hard to work out that the profit from a simple four townhouse project is equal to eight years salary for an average full-time worker.
Let’s say you were to sell two and hold two. The two you sold would deliver around $270,000 in cash. That’s around four years average salary and around 8,000-man hours of work. For you it would be around 200-man hours.
The two you kept by leaving your profit in to act as your deposit in the purchase finance, would typically be cash flow neutral or slightly positive. Plus you would have great deductions from the depreciation, and the higher rental and minimum maintenance that comes by owning new properties.
More and more people from all walks of life are harnessing the power of property development to build a great lifestyle for themselves and their family and underpinning their future through an ever-expanding property portfolio.
Would you like to learn how you could massively improve your financial position by learning how to successfully undertake small profitable property development projects?