Not all real estate developers are rich and wealthy. Only a few who have uncovered the secret behind successful property development enjoy success by becoming millionaires.
This secret is not hidden - buy your acquisition sites low, add value and sell high.
What changes the game is your strategy for finding a real estate deal, implementing plans, achieving highest best use, building and finally marketing and selling your developed project. If you finesse the property development process, you can also be on the list of rich property developers.
You are missing out if you haven’t yet subscribed to our YouTube channel.
Why are property developers rich?
There are 3 main reasons why property developers are rich and making millions.
1. Cash flow
Property developers develop many apartments for rental purposes. These developments have high-valued tenants that provide a steady rental income.
Such properties provide a positive cash flow and usually cover all the property development expenses. Ultimately, the developer will have money in hand.
2. Appreciation
Appreciation or capital gains means an increase in the price of a property. This is how most property developers make money. Real estate prices fluctuate and typically go up over the long run.
You can increase your ROI by combining appreciation with leverage.
For example, you purchased a property of $500,000 with a 20% down payment. You put down 20%, $100,000 and borrowed the rest, $400,000.
If the property appreciates to $600,000, you will receive a 100% return on your investment.
3. Leverage
Leverage is one of the favourite terms for rich property developers.
It means borrowing money from banks or other financial institutions to invest in real estate. It is easy to leverage the financing, terms are flexible, interest rates are low, and you can get a 20% or even less down payment option.
Also, the amortisation period for loans is over 30 years. If you learn property development finance correctly, you can recover 100% of your capital invested in real estate.
Not to say, but you can make millions in a few years with this strategy.
Many know that real estate can create wealth, but few know why. Among the several ways to build wealth quickly, property development is considered the safest and simplest way to become rich in Australia.