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Property Development vs. Retail ‘Off-the-Plan’ Investment

My father always told me – ‘Forget about the stock market; bricks and mortar is the way to go. Property is one of the greatest investments you can make. All it takes is buying at the right time, in the right place, and at the right price.’

My response was something like, ‘Thanks, but easier said than done!’

Property Development vs. Retail ‘Off-the-Plan’ Investment

I researched and studied how the best property investors on the BRW Rich 200 made their bank. What I found was surprising but now seems like common sense – Instead of paying retail prices; they accumulated properties via property development. They bought wholesale, and this meant safer and higher returns!

Maybe, just maybe my father was right after all.

Let’s take a look at the numbers for a townhouse project, comparing the cost savings of acquiring property as a developer rather than as an off-the-plan’ investor:

Developer Investor
Market value

$405,000

$405,000

Less development profit*

$87,032

0

Purchase price

$317,968

$405,000

Plus stamp duty

$0

$12,600

Plus Legals (Purchase)

$0

$3,500

Total cost of property

$317,968

$421,100

Net equity

$87,032

-$16,100

*MDC

27.37%

 

You can see that as a developer I acquired my investment property at $103,000 less than if purchased as a retail ‘off-the-plan’ investor.

Now, get out your calculator and let’s have some real fun. Add another townhouse, paid for by my Self Managed Super Fund, and the cost savings become $206,000 and I have $174,000 in equity!

The Fast-Track to Building Financial Success

If you’ve got money to invest, asset rich and time poor, your superannuation fund has been performing poorly, then this is a strategy that’s viable for you too. Absolutely anyone can do it, but few people do. Most people don’t realize that property development puts you on the fast-track to building financial success.

Contact Malyshka today, we’re ready to help you acquire your first townhouse at developer cost.

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