This article will share five winning hints and tips that will help you kickstart your wealth. We’ll mainly be focusing on the real estate development process. However, we will also share some other hints and tips about different investment types and general guidance.
Why Real Estate Development?
You may be wondering why we are focusing on development? Well, if done right, it can be a high return investment.
Let’s compare developing real estate to investing in an existing property.
If you buy an investment property in an up-and-coming suburb, you will generally have to wait years before you could sell it for a decent profit. And while you can let it out during this time, you will have all the headaches that come with being a landlord. Dealing with tenants, repairs, maintenance, vacancies, paying rates – the list goes on.
And then, as we said above, you need to wait for the market to rise in that area to sell for a profit.
On the other hand, a real estate development project can wrap up in a year, sometimes less. And you will get a net profit in that time. So it is a much quicker way to see a return on your investment.
Budgeting is King
Now, this is a simple tip to help you kickstart wealth.
As a general rule of thumb, you shouldn’t be spending more than you earn. If you can’t budget, you’re probably not ready to develop real estate or invest.
There are plenty of helpful budgeting tools available online.
A budget tracks all of your income and expenses. You should know where every cent of your money is going and how much surplus you have leftover each week or fortnight.
Begin with budgeting and ensuring you have surplus money each month, and investing from there.
You Need Money to Make Money
Any form of investment requires some working capital to start with.
You can’t invest in shares or the stock market without the capacity to buy into it.
And you can’t begin a development project without some working capital. There are upfront costs such as design, town planning, surveying, and more.
A bank can finance a development project, but generally, they will only lend you money for hard construction costs.
Now, let’s get into some more specific tips around property development and other forms of investments.
You Can Develop in Any Market
Here’s a key tip. You might have heard folks saying that you need to time your entry into the development market. Buy low, sell high – this phrase gets thrown around a lot.
The real tip here is that you can generate wealth from property development in any market.
If you do your due diligence, know the game and keep a cool head, you can still kickstart wealth during a market dip.
The Advantages of Development Over Other Investments
While we will touch on other investments in this article, this point is worth mentioning.
Real estate is a physical, brick-and-mortar investment. For example, if you develop a block of land and build two or more properties on it, you can sell them off the plan and see your profit within 14 days of completion.
Compare this to investing in shares/stocks, bonds, and other intangible assets. While these can offer a sizeable return on investment, they are also risky. Again, this is due to market forces. Markets can dip, slow down or even crash. As a result, it’s possible to net a severe loss with these forms of investments.
Real estate, while subject to the market too, is a tangible asset. And, people will always need homes to live in. This makes development the superior choice of investment to kickstart your wealth.
As well as being a brick and mortar asset, another aspect of property makes it a better choice of investment than other avenues. And again, this comes down to timelines.
When investing in shares, you generally need to wait for your dividends. And a stock portfolio can take years to net you a solid profit. All while you remain at the mercy of the market.
Compare this to the time a development project can take, and it’s clear what is a better way to kickstart your wealth.
A Word About Crypto
Now you’ve probably heard about Cryptocurrencies. They are all the rage on certain finance web forums and Facebook groups. And yes, a currency like Bitcoin is worth a lot of real money these days.
There are other types of cryptocurrencies as well.
These are all underpinned by a technology called the blockchain.
While there is some money to be made in crypto, it is also a highly volatile, high-risk form of investment.
In addition to this, the way these currencies are secured means that you cannot cash in on the investment if you lose your passkey. There have been horror stories of people losing hundreds of thousands of dollars, or even millions, due to this.
Let’s compare crypto to property development.
Now, the net profit from development may be less than if you bought into Bitcoin years ago.
However, the benefits mentioned above of property development apply here. First, it’s a physical, tangible asset. There’s no way you can lose access to properties you’ve developed. They are not going anywhere.
Real estate is always a sound choice of investment, and by developing two or more units on one block, you’re essentially doubling the value of your land.
And while development carries risk as well, it is mitigated by having the proper knowledge and by double and triple-checking your figures and feasibility. In the development game, knowledge is power, but it’s money too.
Conclusions
In this article, we’ve explained how to kickstart your wealth, and we’ve focused on property development and why it is a preferred choice of investment compared to riskier alternatives.
And don’t forget our first few tips about budgeting and having some money spare to invest – without these fundamentals, you’ll flounder and struggle. All the best with your wealth generation investments!
