Real Estate Development vs Real Estate Investment

Real estate development is a very high word. If you have a friend and you around borrowing money, he said he recently found through research a stock soared 10 times, so you borrow money to invest in you, you certainly feel very much. But if a friend bought a piece of land near your home and told you that we had a joint venture to build a duplex, you might think you might think about it.

Basically our idea is as follows:

Stocks = losing money real estate development = make big money

Behind this line of thinking stems from the tragedies that we hear too much and stock-related losses ——- Zhangsan stocks lost half a year’s savings, and Li Si committed suicide in the financial crisis.

Instead, you’ve made money by buying a secondhand house in Sydney for the past ten years. This allows us to subconsciously think that buying a house is making money, buying stocks are losing money. And then extended to buy a house to make money is not enough stimulation, because the newspaper and television everywhere on the open car driving luxury apartment, every investor want to see a piece of land, learn how to build their own house, a dream step by step from childhood From townhouses to Town House, it finally became the developer of hundreds of apartments.

The purpose of this article is to want to tell you that making real estate investments ≠ real estate development will make money. The problem with the stock is that when money is lost, it will be magnified by the media and made it widely known to passersby. In turn, the real estate development you heard less than a heroic story of losing money, the Chinese media Wang Jianlin phrase “set a small target first, make it a hundred million,” then the well-known publicity, Australia developer Harry Triguboff Boarded the Australian wealth chart in 2016 more people feel that only real estate development can be rich.

In fact, we do not know is that the stock losses are small losses, except for a few go hand in smoke, most people are not injured. The development is not the same, ah, you need to borrow money to get it, once the pay is all the family business. Why the media did not report a large number of developer bankruptcy thing? Because real estate development is the most profitable government, the government can receive council contributions, GST, Income tax, stamp duty, land transfer fees, infrastructure costs and more in development projects. What business can let the government receive so much money? I think there is no second industry in the world to achieve such an effect, so who will encourage the media to promote developers bankrupt it?

The house has really risen a lot in recent years, people who hold plots did indeed make a fortune, in that case, that development is how to lose it? Here we explain this principle by talking with Ivan Wan and several others.

The first conversation (Wan Bangjun and beauty architect)

Wan Bangjun is also very enthusiastic about the development of real estate, so Wanbang Jun invited a beauty architect in the top ten construction firms in Australia to open a small kitchen.

The beautiful woman asked me, “What do you want to learn?”

I said I would like to learn the basic knowledge and laws and regulations of the Australian construction and development, and strive to see a piece of land, immediately know that this piece of land can be developed, do not hinder the next call before the deposit to help me see this, that help me check.

She replied, “It’s a good idea, but have you ever wondered how much of Australia’s building code is more complicated than you think? Before you look into whether a house can be developed, first the council uses its own environmental law LEP) to plan the limits and densities in this area. There is also a Development Management Plan (DCP) to plan the conditions and supporting facilities to be covered by this house. Finally, there is a unified national building code to guide The details of the house, such as the minimum floor area in each bedroom and the need to have natural light, etc. We do not have to learn in four or five years of class, how can I be taught to you in a short time, the only thing I can teach you is how to identify A good architect, and tell you the precautions to take when signing a contract with him / her.

I say if you look at the earth to you, then you can say that you can make things that you can make?

She replied that most cases are OK, but no one can decide how the ring government, so this is the developer to bear the risk, you know? Most of our customers (80%) will not buy it because there are too many unknowns. Some people think that getting a development license should be sold to other developers, and some are Funds broken chain, some because the market has changed its course, so the development is not profitable. The development of this bowl of rice is not tasty. The building code divides the building into ten levels. I saw a townhouse site near City that occupies three levels. The development team is very experienced, but in the end it is still a loss.

The second conversation (agency, builder and Wan Bangjun)

Intermediary: I was on the North Coast Dee why to bring along the project to promote the project, as far as I know 95% of the development projects or not to lose money, or else did not make their expected profits.

I: That brother (builder) duplex you develop why make money?

Builder: I can afford the land I can not afford. Because I built it myself, so although I did not make money on it, I could save money, sell it, or make profit. And I developed a small project to help my schedule full, both to help me raise workers and can let me more into the material and suppliers get a good price.

I: I observed the main force in the development of real estate in Sydney as if more and more have a builder background

Chen brother: land is so expensive, hard to find, do not build their own profits? Professional to survive, not to live a cheaper cost of construction, that is, architects loopholes, get the approval of others to get cheap approval to get approval.

The third conversation (a bank executive)

Bank executives: In 2015, I spent about 2 million to buy a thousand flat houses near Ryde, overturned duplex, the cost of building one million early, the bank currently valued 2.2 million sets.

I: I estimate the cost of each set of about 1.7 million, invested about 900,000 (including interest and other incidental expenses), earnings are expected to have a million dollars of profit, right?

Bank executives: Almost

Me: Columbia, have you ever thought of another way of investing? My guest, like you, spent 2 million in a big three-bedroom house in Chatswood, up to 3.2 million in two years, or at that time, 900,000 can do down payment for three Western-style houses, and now there are almost one million more increases Well, the key is the risk is small.

Bank executives: I have always had a developer dream

I: If you can not sell a good price how to do

Bank executives: keep rental

Me: it is not a second-hand house yet?

Asked Ryde Agency earlier this year, because the market is not good, the bank executives want to quickly shot the need to sell 190-1000 per set around.

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Want to profit may take greater risk, but in turn is not established a greater risk does not equal to profit

For me to develop a very high, but in the period of buying a house can have the same profit, I certainly buy. Because only small-scale development of the more professional to play it. This article is not to prevent the small-scale development of real estate, but to re-understand the nature of the industry behind Halo from a risk perspective.