Preface ....................................................................................................... 2 Bob Andersen’s Success ............................................................................. 3 How Property Development Makes You Money ........................................ 5 3 Reasons Why You Could Be A Property Developer ................................. 8 Build Your Portfolio While Maintaining A Day Job ................................... 10 8 Great Benefits of Property Development ............................................. 12 Why Now Is A Good Time To Develop Property ...................................... 14 Eliminating Risks in Property Development ............................................. 16 The 9 Biggest Mistakes Made By First Time Developers .......................... 19 How a Developer Makes $116,500 More Than A Retail Investor............. 22 How to Create MASSIVE Wealth Through Property Development .......... 23 How to Earn $2,424 Per Hour From Small Development Projects ........... 26 How to get started with $80,000 Or Less ................................................. 29 How to make $8.58M in 10 years ............................................................ 30 9 Qualities Of A Good Mentor ................................................................. 35

Intelligent investors know that holding and accumulating well selected residential real estate is a proven, tax effective wealth creation strategy. Property investors these days are much more informed and astute than their counterparts of the 1980's and 1990's, and many are looking for 'an edge' to break them away from the pack and fast track their path to financial independence.

Did you know that more than 85% of the world’s millionaires made their money from real estate?
Many of the country’s richest people made their fortunes from property – not by paying retail price like most investors – but by creating their investments at cost through property development.

“BRW Rich 200 Members have often turned to the property sector – and become substantially richer.” Business Review Weekly 31 July 2008.
Until recently this area was the domain of property developers and the very rich. The great news is that no longer do investors have to be multimillionaires or full time property development experts to share in the massive financial benefits that property development can deliver. Traditionally, developers have been reluctant to divulge their techniques and secrets to the ‘common man’. Their attitude has been, ‘I’ve had to make mistakes and learn the hard way, so everyone else can do the same’. 2

All this has changed with the introduction of the Property Mastermind – but I’ll tell you a bit more about that later.

Bob Andersen’s Success
Hi, My name is Bob Andersen and I am the a member of a select group of developers with over one billion dollars worth of projects under my belt. Yes, that’s $1,000,000,000. I have well over $100 million worth of projects currently in development nationally and I am mentoring other developers at the same time. I have written a book about property development with my Son Luke, and am featured in Australian Property Investor Magazine (API) as their resident property development expert. The most successful API article ever published was the ‘Small Development Guide’, 12 episodes sharing some of my property development secrets. When I started developing property in 1980 I was purely interested in using my development profits as a source of income. So on I went, making profits and paying income tax. By the late 1980’s I had learned a lot more about property investment. Finally the light came on. What I should have been doing is keeping some of my development product as a long term investment – obtaining it at developer’s cost, holding for growth and deferring the tax.


Even while performing my own small developments I also had a corporate life during the 1980’s and 1990’s when I held both state and national management positions with some of Australia’s largest property development companies. I have developed high-rise apartment buildings, high rise CBD office buildings, shopping centres, retirement complexes, resorts, student accommodation complexes, land subdivisions, spec houses and townhouses. So over the last two decades I have fine tuned my systems and models for packaging and developing projects using a ‘develop and hold’ strategy. These days I operate two businesses: Positive Property Strategies (PPS) which is an innovative boutique property development business operating at the cutting edge of the industry. PPS partners with high net worth individuals, syndicates and other developers in the development of specific projects. Property Mastermind where I educate and mentor aspiring developers to create wealth and financial independence through property development and investment (this might be where you found this report).


office complexes). let’s take a brief look at the various types of real estate that may be developed. For the purposes of this report I don’t consider renovating a house or building a spec house on a single lot to be property development. In this report I will introduce investment examples which will bring a minimum of $100. subdividing a piece of land. although if you have successful experience in this area you are off to a great start. In this report I focus on residential property development in particular.58 Million over a 10 year period. Before I go any further. building a shopping centre.000 return up to $8. Commercial real estate falls 5 . TYPES OF PROPERTY DEVELOPMENT There are several different types of real estate that may be developed. although most of the principles and processes are similar when developing other types of real estate.How Property Development Makes You Money WHAT IS PROPERTY DEVELOPMENT? Property development is the improvement of a building or a piece of land. COMMERCIAL Commercial property development is the development of real estate intended for use or occupancy by wholesale business (eg. The process becomes extremely profitable when considering renovation of an existing building. or creating a master planned community. building a townhouse complex.

TOWNHOUSES – Townhouses are attached dwellings on community or strata title. student accommodation. LAND SUBDIVISIONS – Land subdivisions are undertaken by dividing a parcel of land into smaller parcels of land each containing its own individual title. factories). In the industry we call it block and slab construction. Below are the various types of residential property. through the walls.  APARTMENTS – Apartments (also     referred to as flats or units) are attached dwellings on community or strata title. retirement. Two attached townhouses are referred to as duplexes or semi detached townhouses. SPECIALISED – Specialised includes all other forms of residential real estate including resorts.e. HOUSES – Houses are detached dwellings each on their own title.e. INDUSTRIAL Industrial property development is the development of real estate intended for use or occupancy by manufacturing or refining business’ (eg. Apartments are often attached to adjoining dwellings on both a horizontal and vertical plane (i. through the walls).somewhere between residential and industrial real estate. RESIDENTIAL Residential property development is the development of real estate intended for use or occupancy by individuals and not business’. Townhouses are attached to adjoining dwellings on a vertical plane (i. ceiling. 6 . and flooring). Single level townhouses are referred to as villas. serviced apartments etc.

industrial. shopping centres). particularly when contrasted to commercial.g. developing a duplex. restaurants. MIXED USE Mixed use property development is the development of real estate for use or occupancy by a combination of the above types.RETAIL Retail property development is the development of real estate intended for use or occupancy by retail business’ for the sale of goods or services (e. slider or splitter. 7 . Several apartment projects close to cities now provide for commercial or retail premises on the lower levels and residential apartments on the levels above. Residential real estate development provides several entry level opportunities (e.000 in equity to finance. having spent our lives living in it. A duplex in a capital city might require as little as $100. WHY RESIDENTIAL REAL ESTATE DEVELOPMENT There are two primary reasons for selecting residential property development for your first project.g. In recent times there has been a move towards mixing residential with commercial or retail. SMALLER UPFRONT INVESTMENT Residential real estate development has a potentially lower financial requirement. small land subdivision) that require much less by way of finance than do entry level opportunities in the other types of real estate. Many budding developers also own one or more investment properties and may have undertaken some form of renovation. or retail development. FAMILIARITY We are all relatively familiar and comfortable with residential real estate.

most from the bank) and it takes experience to know what to do. It is the ‘people’ (architect. What you will see me repeat time and time again is that property development is all about ‘managing people and managing processes’. engineer. Property development could be said to require a mix of 1) time. Firstly let me explain a few concepts. Particularly as the profit from a 12 month three townhouse project could equal 4 or 5 times the average wage. builder etc) who put in the big hours – you just co-ordinate them. it takes money (some from you. But beware after one or two projects the full time job soon loses its appeal.3 Reasons Why You Could Be A Property Developer You have searched the web for something to do with property development and located my website. 8 . THEN requested the report you are now reading – so you have now made your first step. It takes time to find a site and develop it. 2) money and 3) experience. TIME One of the big misconceptions aspiring developers hold is the time it takes to develop a small project (say 2 – 4 townhouses). Later in this report I will break a typical project into the hours involved in each step – and you will be amazed. This means that in most cases you can still hold down a full time job and develop a project in your spare time.

000 from your own sources. In other words a mentor.MONEY On a typical development loan you would be expected to put in 25% of the costs from your own sources (cash or equity in other property) and the bank will lend the other 75%. based on his many years of experience. I owe so much of my current success to Bob’s education systems. citing examples of both small and large projects. See Manuela’s story in the January 2009 edition of API magazine. Bob has a strong desire to assist participants undertake their own projects. There are advanced strategies you can learn where your ‘put in’ could be less or even zero. I have gained enormous insight. particularly with regard to due diligence. The topics covered are relevant for both novice and experienced property developers. EXPERIENCE Experience comes from doing things – ideally successfully. 9 . A typical 3 townhouse project might require you to put in $250.000 to $300. and overall project management. That ‘somewhere’ comes from investing in your education in the subject of property development and getting alongside someone of considerable experience who can advise and guide you and who will let you leverage off their experience. But you have to start somewhere. Manuela Benson Canberra. financial feasibility. Bob gives a course full of detail on how property development really works.

Build Your Portfolio While Maintaining A Day Job PART TIME PROPERTY DEVELOPMENT Most novice developers. This would give you an annual income of $70. making the step up from investor to developer. This is particularly the case for investor / developers wishing to build their investment portfolio while maintaining their day job.000 for two years while you get your next project completed. HOLD OR A MIX OF BOTH? Most development companies are run as a profit generating business. They buy land. add improvements and sell – ideally at a profit. start developing on a part time basis. This might mean you sell part of your project to give you ongoing income until your next project produces a profit. SELL. Property development is all about managing people and processes. It is not difficult to manage at least one small project while holding down a full time job. The two sold might produce a taxable income of $140. Even if you’re planning to eventually become a full time developer.000. it would be wise not to hand in your day job until your project is about to produce its profit. Generally they don’t hold their stock for investment purposes – but there are exceptions. If you developed a three townhouse development you might decide to sell two units and hold one for your investment portfolio. 10 .

180. He gave us Bob Andersen’s contact details. He’s a genius. We were about to give up on our dream. After an initial meeting Bob declared our scheme unworkable. This will depend to some extent on the size of your developments. we had a totally revised. That’s a $1. Two weeks later.000). two DA’s from two different architectural firms and a not too favourable valuation for our proposed student accommodation project we didn’t know where to turn.Property development performed using a develop and hold strategy can be a great way of building wealth by accumulating assets acquired at cost. simpler and far superior design. increase the on completion net rent by adding 28 bathrooms (up from 4) and thereby increase the end value by $570. Terence Munro.000. Either way it can set you on your way to financial freedom and YOU decide how much time you can afford to commit. Learn from the best. If you are developing full time you might be able to sell some stock for cash (income) profit and hold some for investment. 11 . After two years of work. after brainstorming with his associates. Brisbane. If you keep your day job and develop property part time you should be able to keep your stock as an investment subject to meeting end finance serviceability criteria. But a chance meeting with a senior executive from a major financial institution turned everything around. In effect Bob was able to reduce construction costs by 33% ($610.000 turnaround.

or you can keep your profit in the property and hold it as an investment. DEPOSIT You can use your development profit as a deposit to purchase your completed investment. RENTAL YIELD You can significantly improve your rental yield due to the lower cost of acquiring your investment property.8 Great Benefits of Property Development Most investors buy at retail price and miss the opportunity to build a substantial property investment portfolio through ‘wholesale’ development opportunities. TAX BENEFITS You can gain the favourable taxation benefits of depreciation on new property. CAPITAL GAIN You do not have to wait for the market to rise because you can create your own capital gain up front. 12 . PROFIT You have the flexibility of either making a cash profit by selling your property. These are some of the benefits you can receive by becoming involved at the ‘cost’ end of production and not at the ‘retail’ end like most investors.

I have several investment properties but wanted to get involved in development. Melbourne. He sees angles and negotiating techniques to create a win / win outcome like nobody else. Julie Valetic. I had done others but this one leaves the rest for dead. None of the pretenders come up to Bob’s boot laces. I’ve since advanced my education into options and joint ventures with land owners and at a Platinum level I am nailing down my first deals.100% p. GST. depending on gearing levels. during the development. quantifiable benefits.HIGH RETURNS You can obtain returns on funds invested of 80% . The confidence and results I am achieving in having access to Bob whenever I need him is beyond a dollar value. This is just an outline of the technical. SPECIAL SAVINGS You can save on stamp duty. RAPID PORTFOLIO GROWTH You can acquire investment properties and build your portfolio much faster than you otherwise could by paying retail price. I did Bob’s education course. marketing costs. 13 . agent’s commissions – and you get to keep the developer’s profit. The immeasurable benefit is the lifestyle – building control over your wealth… and therefore your life.a.

I have always done better in non-boom times. Some are showing moderate profits while some niche market projects are showing exceptionally good profits. Development approvals take longer to obtain. During boom times development sites are harder to find. 14 . As I write this report. are often overpriced and often have to be purchased without suitable contract conditions. Each stage of the property cycle has its own quirks to deal with but I’ve always made profits in all market conditions.. it is 2010 and we have just survived the worst financial crisis in eighty years. It might sound contradictory but I don’t like boom times.. building prices increase and interest rate rises are a strong possibility as the regulators try to take the heat out of the market. In spite of this I have over $100 million of projects in the pipeline and I am investigating more. in times like this ‘economic crisis’. in other words.Why Now Is A Good Time To Develop Property I’ve been involved in developing property since 1980 – that’s about four complete property cycles.

audio and video material and particularly the level of personal contact at Platinum level have been a key ingredient in our success.The current state of the property market is very interesting. Bob’s education material and personal mentoring is of the highest quality. In other words. Tim Bell Turner. The credibility of Bob and his genuine interest in assisting others in becoming more astute developers makes the course extremely valuable. Tino Filippelli Liberty Builders. As an experienced teacher I understand the importance of quality content presented in an easy to understand format. That’s why this is an excellent time to start developing your portfolio. interest rates are below the long term average. His written material. On the positive side. building prices have pulled back. Sunshine Coast. I haven’t seen a better time to develop property on a ‘develop and hold’ strategy in my 29 years in the industry. sites are available. The material and knowledge imparted in Bob’s course is incredibly inspiring to any aspiring developer. finance is still available and there is a national and worsening undersupply of accommodation which has caused a substantial and continuing rise in rents. 15 . Melbourne. Under his education and mentoring program we have now completed our third successful development at Maleny.

INTEREST RATE RISKS The interest rate on borrowed funds could rise during the development or long term holding of the investment causing increased development and holding costs. With that as a platform the other risks are readily containable. But the rewards are significantly higher too… and risks can be managed and minimised. is available. By far the highest risk is Inexperience (lack of knowledge). Always follow Rule #1 – align yourself with a mentor and get educated. Some of the common risks include: INEXPERIENCE A lack of knowledge.Eliminating Risks in Property Development Embarking on your first property development project carries greater risks than purchasing your first investment property. The actual increase in interest 16 .5% gradually during a 12 month four townhouse project. However the good news is that help at the highest level. lack of education and failure to engage a professional mentor / advisor particularly on the first one or two projects will greatly raise risk and may affect the ability to borrow. via education and mentoring. The numbers are bigger and more things can potentially go wrong. However. it’s not world shattering. Let’s say rates go up 1.

17 .would be $1.500 per unit. MARKET RISKS Property values can fall as well as rise and there is no guarantee as to the market value of your investment on completion or the demand for your investment should you desire to sell it. values would need to drop by 15% before you would lose your first dollar. particularly if you are holding at least some of your product. Extra consultants might be required to supply special reports and infrastructure charges might increase. Of course property values rise more often than they go down so over a longer period of time you will be in front. Buying DA approved sites. On an average project. CONSTRUCTION RISKS Construction costs can increase during construction because of disputes or unexpected delays caused by labour or material shortages thereby lengthening the construction period resulting in increased holding charges. subject to DA contracts and good pre purchase due diligence can help minimise this risk. APPROVAL RISKS The obtaining of satisfactory development approvals can be subject to time delays and unexpected costs. Councils could be slow or reluctant to approve an application. Performing due diligence on the builder and using a lump sum fixed price and time contract can help minimise problems. quick turnaround projects give market turnarounds less time to bite. Small. Of course rates can also go down creating more profit.

Bob saved my life and made me $400. Successful development is simply a matter of understanding the risks… and managing them. not borrowing to full capacity and having a contingency buffer is important. planner) and some great negotiation with Council by Bob we achieved an outcome that even shocked the planner. Using Bob’s inner circle of associates (lawyer. In spite of what I had learned I got too gung ho and bought a ‘lemon’ site – site unseen and interstate. Bob is brilliant.Melbourne.000. architect.000 profit when I thought I was going to lose $400.FINANCIAL RISKS Undercapitalisation (not having spare capital as a buffer if costs escalate) or over gearing is a common problem with budding developers. road widening resumption to name just a few problems. Jack Pyziakos. bad shape. 18 . Pre finance qualification. Noisy. He turned my lemon into lemonaide. If it is your intention to become involved in property development you need to realize that there are potential risks. Staring down the barrel of a potential sizable loss I joined Bob’s partnership program to give myself the best chance of recovering my money.

The 9 Biggest Mistakes Made By First Time Developers STARTING OUT WITHOUT A MENTOR Rule #1 – you must have a mentor and be educated. POOR DUE DILIGENCE This is related to #2. Before you even start looking you need to know the type. Adhere to Rule # 1 and you won’t make the other 7 mistakes. Effective due diligence needs to incorporate many aspects relating to town planning. YOU DON’T KNOW WHAT YOU DON’T KNOW A case of a little bit of knowledge is dangerous. There is too much money involved to hope for the best. You don’t want to buy a lemon. engineering and financial analysis. It’s usually only after you have received education and communicated with an expert that you realise how little you knew when you started. NO STRATEGY OR PLANNING Some new developers just go out and buy ‘a development site’. 19 . size and ideally the location of your proposed development and what constitutes market value. This is a highly profitable enterprise and the cost of education and a mentor is negligible compared to what you could lose without one. It’s a humbling experience. Having a comprehensive due diligence checklist is essential.

valuers or recent sale data. While not technically 100% correct it reinforces the importance of buying well. An inappropriate structure could cost you plenty of $ in the short or long term. MY SECRET SITE FINDING WEAPON I rely on a special tool to drastically cut down the time I spend locating hot development sites (or for that matter hot investment deals). You need to know all the costs that relate to the project and how much to allocate to each one. For further info on the tool I used to slash my average site finding time by 60% . UNDER CAPITALISED Before looking for a site you should know your borrowing limit and work within it leaving a buffer. Your preferred strategy on either holding or selling will affect the structure. UNDER COSTED FEASIBILITY Related to # 2.OVER-PAYING FOR THE SITE There’s an old property saying ‘You make your profit when you buy the land’.click here. capital gains tax and GST. Market savvy. INCORRECT OR LACK OF STRUCTURE Setting up the right structure before even looking for a site is critical. Nailing the costs on the expenditure side can be more difficult – particularly for beginners. I have seen so many beginners borrow to their full capacity and have no room to 20 . It’s not all that hard to get a handle on the income side of the feasibility – the sale prices – from agents. particularly regarding site values and an ability to negotiate and structure deals are great assets. Different structures will have different outcomes on taxation issues such as income tax.

Colin Minter. UNQUALIFIED FINANCE Further to #8. I have seen people spend time nailing down a deal only to have finance rejected and lose the deal to someone more organised. consultants etc was awe inspiring. Peter Kasten Perth. sales slowed or construction took longer. Excellent course! Highly recommend it for people like us who want to get into property development but don't know where to start. The way he taught me to deal with financiers. spent over 2 years and $140.000 getting one DA then a second improved DA and then could not finance the project. Armed with a huge increase of knowledge I joined Bob’s partnership program when it came time to undertake the project. Also featured in the API magazine. Recently I bailed out someone who had purchased a large site.manoeuvre if interest rates went up. As head of an investment syndicate I joined Bob’s Gold level education and mentoring program prior to commencing a substantial development project. 21 . It's given us the confidence to get out there and get started on our first project. His connections within the industry are at the highest level and I can attest to the fact that his guidance and skill made us tens if not hundreds of thousands of dollars in extra profit. Sydney.

As you can see.000 16. A basic triplex – three townhouse – project would save you $349.000 20.000 0 400. Below is an illustration of the cost savings of acquiring property as a developer at cost price.500.000 0 0 500.500 (16. if you were the developer you would have acquired your own investment property $116.500 More Than A Retail Investor As a property developer you have the choice of selling your product on completion and realizing a cash profit or holding as a long term growth and income investment – or you could do a combination of the two.500 516. Developer 500. as opposed to acquiring property as an investor at retail price.000 80. 22 .000 Investor 500.Example: How a Developer Makes $116.500) Market value Less development profit* Less marketing costs Purchase price Plus stamp duty Total cost of property Net equity * These numbers are based on a project showing a return of 19% on costs.500 cheaper than a regular retail investor. For example this could be one townhouse in a 3 or 4 townhouse project.000 400.000 100.

Using our previous example of paying $516. long term. When they have built up enough equity from organic growth they refinance. and reach financial independence much more quickly through being a property developer. This means you can build a much larger portfolio. extract the spare equity and use it as the deposit to purchase another property. because you are buying your own properties at cost meaning your borrowings are less and your affordability is greater. Just have a look how residential property in Australia fared compared to shares in the current financial situation. tax effective strategy of building wealth. How to Create MASSIVE Wealth Through Property Development The accumulation of income producing residential real estate is a proven.500 retail versus paying $400.000 by developing. As a developer you can create instant equity (profit) and can therefore acquire more properties earlier. we can calculate that at an annual capital growth rate of 7%. and statistics back this.314 days) of growth on day 1. subject to the financier’s serviceability criteria.The rate at which you can expand your property investment portfolio over time through property development is even more startling. There are several ways of looking at this. Developing your own property investments at cost simply means you can massively enhance this proven strategy and build a bigger portfolio sooner.6 years (1. 23 . Regular retail investors build their portfolio by waiting for values to increase organically over time. the developer is immediately accessing 3.

000 property at retail price would require an input of $116. and move on and use it on the next deal is what enables you to turbo charge your acquisition rate and potentially build a massive property investment portfolio quickly. The investor who developed his own property has put in no equity into the end purchase – the 20% deposit was funded by the project profit. 24 . The loan would be $400. So he can immediately go and develop another project and repeat the process – balancing the holding / selling ratio to suit his personal long term financial strategy. The loan would be $400. The investor who paid retail price has to wait some years for the property value to grow to a point when he can refinance and extract the increased equity to put down as a deposit on the next investment property.That’s a fabulous start.000 property which costs $400. Developing and holding a $500.000 for the 20% equity and $16. plus loan and legal costs). Buying a $500.500 for stamp duty.500 ($100.000 which would pay out all the development costs.000.000 would require no input. extract your cash. Let’s examine the capital required to purchase the same property by both methods using 80% LVR finance. This ability to do one multiple investment deal.

Ins Letting Fees 50. Assumptions Purchase Price Loan Interest Rate Borrowing Costs Total Loan Salary Income Weekly Rent Annual Rates Body Corporate Letting Fees Repairs & Maintenance Insurance Expenses 400.900 Repairs.500 180 43.30/week) 25 .000 Total Cash Costs 475 Depreciation 24. Maintenance.095 73.500 New Taxable Income Tax payable without property Income Salary Income Rental income (50 weeks) Gross Income Tax payable with property 50.200 575 2.THE COST OF HOLDING A TOWNHOUSE So what would be your ‘out of pocket’ cost if you developed and held a townhouse described above? Based on July 2009 Australian tax rates.500 1.750 Plus rent received 73.140 29.415 13.442 23.500 Borrowing Costs (over 5 yrs) 1.200 Total Tax Deduction 2.750 43.000 Interest 6.067 5.750 29.509 4.192 29.0% Rates 900 Body Corp 400.140 300 Gross Income 275 Less tax deduction Depreciation Yr 1 – estimate only 13.655 9.750 Total Cash Income Less total cash expenses Annual Cash Deficit* ($4.000 Tax saved – refund 23.095 30.000 1.415 223 1.

and even the hourly rate earned. My architect packaged the DA process by coordinating the other consultants. It is your people (team) such as the town planner. engineers. So I chose a recent 4 townhouse project to use as a sample. Normally when I perform a financial feasibility analysis on a project I judge its profitability on the profit margin as a percentage of costs and the internal rate of return. One of the startling things new developers discover is that you don’t put huge hours into a small development. However it is an interesting exercise to examine a typical small project and calculate the annual return on funds invested. Property development is all about managing people and processes. architect.How to Earn $2.424 Per Hour From Small Development Projects What better way to illustrate a point than to use an actual example of a typical investment. These are the hours I put into a recent 4 townhouse project. builder and marketers who put in most of the hours. 26 . Financiers do the same.

27 . If you held the townhouses on completion with no marketing costs the hourly rate would be $3.000 the hourly rate earned during the project = $320.000 / 320. but let us assume it is double. What if the project was an eight townhouse project instead of a four townhouse project? What would be the differences? COST.000 x 100%) = 100% Sounds good? In fact it can be better.000 ($400.Stage Site location Due Diligence Finance Acquisition Development Approval Building Approval Tendering & Construction Marketing.000 / 132 = $2. Financing the project on a standard 80:20 loan the equity requirement would be $320. Sales & Settlement Total Hours 22 9 13 3 15 10 47 13 132 Based on the profit from the earlier project of $80.000 x 4 x 20%).000) on this 12 month project is (320.424 / hour And that’s by selling the project. I say almost because there would be some economy of scale cost savings with the professional fees and the building contract. It would cost almost twice as much to develop.030.000 x 4 = $320. The annualised return on funds invested ($320.

lose a little profit to pay him.82/ hour. and reduce the 85 hours to about 10 hours. The 8 pack profit would be two times the 4 pack profit. not your time.000 and the hours worked are 177. engineers) might spend a bit longer on the design – but that’s their time. The consultants (architect. Most of the time elements would be the same with the exception of construction which would be about 1. Sales & Settlement Total Hours 22 9 13 3 15 10 47 13 132 8Pack Hours 22 9 13 3 15 10 85 20 177 So if the 8 pack profit from selling is $640. You have more on site meetings with the builder.TIME. PROFIT. what is your hourly rate? $640. 28 . Let us revisit our earlier table.8 times longer. In fact you can engage a professional to do that. 4 Pack Stage Site location Due Diligence Finance Acquisition Development Approval Building Approval Tendering & Construction Marketing. Would you spend twice as much time on the larger project? Definitely not.000 / 177 = $3615. Remember it’s all about managing people and processes. This is where the saving is.

Let us take a look at how much equity you would need to get started in what I would call an entry level development project – a duplex – sometimes called a dual occupancy or semi detached. but it is the start of a long term wealth building strategy. you don’t need to be a millionaire to get started in property development and acquire investments at absolute developers cost. 29 .I should point out that the curve does flatten out somewhat with larger and more complex projects.000 Or Less Surprisingly. It could be in the form equity you are holding in your house or other investment properties.000 to $400. The cost of developing a duplex would vary depending on the geographic location – with the land value causing most of the variation. The financier will put in the other 80%. Typically you will need to put in equity (deposit) to cover approximately 20% of the costs for a duplex. On completion the two dwellings could be held on one title or separately titled. you could start on a duplex (2 attached townhouses). Your profit margin as a % of costs might be a little lower. Your 20% equity does not have to be in the form of cash. If a 4 pack is too big for you to get started.000 per dwelling. Basically it is two attached townhouses or villas with a common wall. How to get started with $80. In a capital city the land and building cost per dwelling could be in the range of $300.

in which case your required equity would be $80.000 and $200.000 then the equity required would be between $120.000 or even zero depending on your negotiation skills and you would get to keep one of the dwellings at cost.000 (average $160. We will look at undertaking one small project (3 – 4 townhouse) every second year for ten years.000 x 80% . would typically be $210. How to make $8. So if we say the cost to develop a typical duplex is between $300. subject to serviceability. On the other end of the scale I have a friend developing an ocean front duplex on the Gold Coast with each dwelling worth $7.000). The available equity to put into a development.000 you could consider doing a joint venture with a relative or friend. s Property investment is the vehicle but property development is the supercharged engine that drives the profits. 30 .000. Let us say you own a house worth $450.58 Million in 10 years.000).000 with a mortgage of $150.000 and $400. Of course if you didn’t have access to the full $160.Regional areas could be less.500. in fact I am being conservative in my calculations.$150.000.58M in 10 years A wealth creation plan should have a goal and I will show you that it is entirely possible to make $8. That’s five small projects over ten years.000 ($450. Just about anybody could do that while holding down a full time job.

7. 3. Assume a four townhouse project where four are held. YEAR 3.$80. Of course you could have used the after tax profit to reduce the debt.000 In the following table I have set out what the equity. 31 . YEAR 9.000 plus $20. Assume a four townhouse project where three are held and one sold. Assume a four townhouse project where three are held and one sold.000 Profit (equity) if holding one townhouse .000 selling cost Profit if selling one townhouse . and 9.$500. I have assumed capital growth of 10% per annum and interest only finance on the investments held. debt and value would be over a ten year period for each of the five projects being developed in years 1. Assume a four townhouse project where four are held. Assume a three townhouse project where two are held and one is sold. I will assume that helped you drive a good car and enjoy some great overseas holidays. YEAR 7. YEAR 5. We will adopt the figures from the chapter ‘Developer Investor vs Retail Investor’ using our standard $500. Your ability to hold stock will be subject to the bank’s normal lending criteria. To refresh your memory those figures are: Value of townhouse on completion .$100.000 townhouse.000 Cost to develop each townhouse . I haven’t taken into account the profit made on the three townhouses sold. 5.YEAR 1.$400.

000 1100 1210 1331 1464 1610 1771 1948 2143 2358 1205 1471 1763 2084 1452 1452 1452 1452 1452 1452 1452 1452 1815 1996 2196 2415 2657 2923 3215 3536 440 659 901 1167 1459 1780 1756 1756 1756 1756 1756 1756 2196 2415 2657 2923 3215 3536 708 1062 1451 1880 2834 2834 2834 2834 3542 3896 4285 4714 857 1286 3428 3428 4285 4714 32 .THE TEN YEAR PLAN The table below shows us the equity.000’s Year 0 1 2 3 4 5 6 7 8 9 10 E1 D1 V1 E2 D2 V2 E3 D3 V3 E4 D4 V4 E5 D5 V5 200 800 300 800 410 800 363 531 800 544 664 800 744 810 800 963 971 800 1148 1343 1558 800 800 800 1. E = equity (profit in year 1 then growth. E=V-D) D = debt (assume interest only) V = value of units held (assume 10% pa growth) Numbers are in $. value and debt on our growing portfolio over a ten year time span.

I have used projects showing a 19% return on costs (ROC) which is fairly average. But what’s different about building your portfolio through development is that you don’t have to wait for organic growth the increase the value of your portfolio to then refinance. At the end of each project you have an immediate 20% deposit. I have allowed one project to be developed every two years.000 or $6. Typically such projects would take 12 to 15 months to develop.858 = 10. 33 . Sure this might sound theoretical but how reasonable are the assumptions. pull out the extra equity and use it as a deposit on the next new investment.582 * Net present value. You don’t have to wait two years for organic growth so you can accumulate properties and equity so much faster.588 = 54. We’ve already seen you can do at least 1 project while in full time employment.588.582.270 = 8.At year 10: Total Value Total Debt Total Equity LVR NPV* = 18. You would also have a portfolio of 14 investment properties.46% = 6. I have used 10% growth which is around the 30 year average.000 in present day dollars if discounted back for 3% inflation. The value today if the equity in ten years time is discounted back by average inflation of 3% per annum That’s right! In ten years you could have accumulated equity of $8.

high yielding projects with investors but the principle is exactly the same.000 : $20. So what if you only develop projects with a 15% return on costs and growth only averages 7%? Well you’ll still be rich.000 : 33. but you would still have a great lifestyle and retirement.000 to $240. My question to you is what if you do nothing? In fact even if you stopped developing at the year 10 mark. by year fifteen your position would be: Value Debt Equity LVR : $30.8% Such is the power of property investment through development and compound growth.270. Of course you could keep going and add another project in year 11 and so on.371.000 equity.You only need $300K to start – either your money or someone else’s. 34 . a little less so perhaps.000 : $10. We know it is possible to develop a small project while holding a full time job. possibly using the equity from your home. So what have we learned so far? We know we can start developing small projects with say $160.101. Experience is the only skill you are lacking and this can be gained through a mentor. These days I tend to do larger. This is the principle I have used over the years to accumulate wealth.

I have seen some real disasters where beginners have gone out undereducated and with no ongoing expert advice. To help you in your quest for the best property development mentor I have set out below the essential elements you should be looking for. some seriously. I have also included a table where you can compare ‘applicants’ for your mentoring position. If only they knew the value obtaining expert education and mentoring. 35 . The 1st rule of successful property development is to find a mentor who will help to educate you in all aspects of the investment such as risk assessment. site selection and financing options. Look at any of the public property forums and you will see newbie developers who have gotten into trouble. It’s your money – don’t be afraid to ask the hard questions.9 Qualities Of A Good Mentor A good mentor takes pride in your success and can mean the difference between great profits. or none at all. seeking advice from what is often equally dangerous and ill-informed individuals. I have also saved a few from extinction.

ex real estate sales and marketing people. 36 .9 Essential Elements Your Mentor Must Possess LONGEVITY It is important that your mentor has successfully developed through the ups and downs of at least two full property cycles. consultants (architects etc). analysis. I suggest the present day value of such a portfolio of projects should be at least $150 million. acquisition. Others passing themselves off as developers include renovators. BE A REAL DEVELOPER A real developer is someone who controls all stages from site location. Some would be mentors don’t even develop property but make their money from seminars etc. PAST DEVELOPMENTS Your mentor should have at least 14 years experience as a real developer and therefore should have an impressive portfolio of past projects. design. construction and sales. Ask them for a list. That means at least 14 years of property development experience. approvals. They will need to have controlled all aspects of the development of those projects as either the developer or development manager. finance. Many have developed nothing or at best a few houses or duplexes.

For example. 37 . finance and marketing strategies. residential (land subdivisions. resort). I suggest a minimum value of current projects to be $15 million covering 30 to 40 dwellings. finance. retirement. INDUSTRY PROFILE Your mentor should be well respected and an acknowledged leader within the property development arena. STRUCTURED EDUCATION AND MENTORING PROGRAM Your mentor should have a defined education program and strategy to take you from a raw beginner to the successful completion of your first project – and beyond. commercial. units). townhouses. MARKET SPREAD It is highly desirable that your mentor has rounded development experience by having developed a range of products. He / she should ideally have published books. reports and articles in the public arena and be well connected in construction. Ask them for a list. specialised residential (student. IMPLEMENTATION Your mentor should have a specific strategy and level of mentoring for the implementation of the education program into a live property development project.PRESENT DEVELOPMENTS Ideally your mentor should currently be involved in the development of projects in order to be up to date with current trends. He / she should offer advanced training in niche areas and defined levels of membership. market intelligence. marketing and professional consulting circles. designs.

retirement. selecting a mentor to help you take your next step to building a profitable property portfolio.PRIVATE MENTORING A number of mentors act as a ‘front person’ role in the marketing and promotion of their programs.000 from 3 townhouse projects to retirement villages Commercial.000.000. 38 .Private Client Advanced mentoring / advice during development Direct with Bob and his two senior development managers Contender Longevity Real Developer Past Projects Present Projects Market spread Industry Profile Structured Program Implementation Mentoring Your next move should be the research and consultation phase. book author. units.Gold Membership . lecturer to industry bodies. retail.Platinum Program .000 Over $100.Property Development Course . residential (land. then hand over the ongoing contact to underlings (or even spouses) they call ‘team members’ who have very limited experience. Bob Andersen 29 years of development Bob’s development company is Positive Property Strategies Over $1. resort) Highly respected developer. Put any contender to the test below.000. primary contributor and resident development expert for Australian Property Investor magazine 4 levels of education / mentoring: . townhouses) specialised (student.

Here investors were educated and personally mentored by me in the art of safe and successful property development as a vehicle to build and accumulate wealth. There will be only 300 courses released. Look out for information and details in the next couple of weeks. This course SOLD OUT in just 10 days. Following the success of these ventures I received considerable pressure from a number of investors for further education and ongoing personal mentoring. so I formed a private ‘closed door’ club. I launched for the first time my Property Mastermind Developer Course – a comprehensive guide to becoming a successful property developer by following my step-by-step system. Then in 2009. 39 . I’m scheduling a new release and offer of Property Mastermind on the 19th of October. 2010. and once they’re gone I’ll be taking it off the market.You Too Can Be A Property Mastermind In 2007. I travelled the capital cities of Australia conducting workshops about property development.

but I’m happy to say I have just put the finishing touches on the enhanced and upgraded Property Mastermind Developer Course 2. and 40 . I will only be making Property Mastermind Developer Course 2.0 available for a limited launch period. Coming Soon: Property Mastermind Developer Course 2.0 As before.0. completely selling out within days of release and garnering great feedback and reviews from customers. There are a couple of reasons for this: One: I’m only getting a limited number of sets produced in one ‘production run’.Property Mastermind Developer Course Response to the Property Mastermind Developer Course exceeded my expectations. Since then I’ve been concentrating on delivering great value to my clients (while continuing my core business of property development).

examples and strategies to share with you. I’ll have plenty more case studies.Two: I want to ensure I have sufficient time and energy to focus on helping purchasers get the most out of the course. you’ll enjoy my new stuff. The launch is scheduled for mid October. I look forward to assisting you increase your property development success. If you have any interest in property. Best wishes. I can only help a finite number of people at one time. 41 . Before the doors open.

communicated or transmitted in any form by any means without the prior written permission of the copyright owners. 42 . Disclaimer: The information contained in this report is provided on the understanding it neither represents nor is intended to be advice and is provided as general information only which will require further consultation by the reader to identify the applicability of the information to the reader’s specific requirements.Copyright: Copyright Bob Andersen 2010. and is referred to by way of example only. stored in a retrieval system. The reader should obtain independent financial and legal advice in respect of their specific requirements. The author does not warrant the accuracy of the information or its appropriateness for the reader’s specific requirements. No part of this publication may be reproduced. All rights reserved. The author expressly disclaims all and any contractual negligence and any other form of liability to any person in respect of the information contained in this book and any consequences arising from its use by any person in reliance upon the information contained in this report.

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