Surely, you’ve considered a small-scale development project, who hasn’t?!
3 things everyday investors and first-time developers need to know
You can't afford to make mistakes
Not having experience in this type of process means you’re vulnerable to making mistakes and you really can’t afford to get it wrong.
The development process is costly
Development costs like council fees, construction costs, low gearing and high-interest rates have all increased noticeably over the last few years. The bottom line? Developing is expensive and it needs to be done right!
Time is an equaliser
Many successful developers start out by teaming up with someone who has walked the walk first. They share their returns, so they can learn the ropes from someone more experienced.
Let us assist you to get it right
Small-scale development projects are perfect for proactive investors looking to exponentially grow their asset base and high household income earners looking for something outside the box to the standard type investments.
The accumulation of income-producing assets (aka property) is the reflection of a well-executed ‘buy and hold’ strategy. This is the strategy I have personally adopted, with great success. However, the key to successful execution is investing in multiple assets to diversify your risk.
Small development projects can give investors more control over the speed of growth. An investor can purchase a residential property to hold but manufacture growth by adding additional dwellings (but only as many as they can sustain at completion).
Expected return on investment (ROI)
*100% return – The aim will always be for a 100% return on equity. For example, if you put $350,000 equity in, the return is $350,000 in equity uplift.
*22% return on cost – The average is 22% return on cost. A 22% return on cost means your (net) profit was 22% of the total development cost of your project.
*6% gross yield – The average gross rental return is 6% once all rented out. For example, if your project valued at $1.3m the project would lease for $76,000 p/a.
*These figures are calculated from past project averages.
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