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4 Reasons Why Small Property Developments Are a Great Way to Grow Your Wealth

Written by Peter Kelly Posted On Thursday, 30 January 2020 06:23
4 Reasons Why Small Property Developments Are a Great Way to Grow Your Wealth

More and more regular folks are looking for ways to grow their wealth. In days gone past most mums and dads would look to investing in an existing property or more. By growing a rental portfolio, they would guarantee themselves a steady stream of passive income. Property development was left to the wealthy, not everyday folks. 

Yet today some people like yourself may be sitting on a gold mine without realizing it. Developing a residential lot into two or more smaller dwellings is a brilliant way to grow your wealth. Let’s check out four reasons why novice property developers are leveraging small property developments to grow their wealth. 

1. Leverage The Value of Your Land

If your family home sits on a lot large enough and suitable for subdivision you can leverage this value. You can undertake a residential development project and walk away with a profit. Yes, this does mean a knockdown and build. But if the kids are all grown up and have left home you might have been considering a downsize anyway. 

You might also own another home or a vacant lot that is also ripe for development. In days past you might have waited for it to enjoy some capital growth so that it increased in value to then sell. But why sit around waiting for capital growth when you can create it through development? 

Leveraging the value of any existing land you own by developing small-scale real estate on it is a great way to grow your wealth. 

2. Rental Income, or Profits

Once you successfully develop a lot to build two or more smaller dwellings on it, you have flexibility and choice. You can choose how you see your profit. You might choose to rent out one or all of the properties. This guarantees a steady passive income for years to come. You also walk away with more in your pocket when compared to buying an existing property or one off the plan. This is because you’re the developer so you walk away with the slice of the pie the developer would usually get. 

The other option is to sell the properties off the plan. This way you have a much shorter settlement period and you see your profit sooner. You could walk away with a pretty sum by selling two or more small properties that you have developed from one. Again, small property developments are the way to go if you want to grow your wealth.

3. Other Methods of Investment Are Riskier

You might be reading this and wondering if it’s worth it. The stock market might be a better bet, right? Well, a bet is the right word for it. Stocks are a risky investment. Even a company with a strong history has the potential to go bust. Just look at Kodak, Blockbuster and other companies who have failed to adapt to changing markets. 

The thing about small residential property development is that it’s not without risk. That’s why if you choose this method to generate wealth you need to learn everything you can. Knowledge is power so they say, and this is true for this game. Going in blind or winging it will end in tears, every time. There is a proven formula that works. And you need to be willing to learn it. If you’re not, you should strongly consider engaging a project manager to guide the process for you. A dedicated residential development project management company can leverage their existing relationships. This will save you money when compared to doing it alone. 

Yes, small property developments are a high-risk venture. But they’re high return too. If you know what you’re doing, you can generate serious amounts of wealth. And if you don’t, you can rely on a company that knows what they’re doing. Either way, the risk can be worth the reward. 

4. Why Stop at One?

Once you’ve successfully developed a lot and walked away with a profit, nobody says you have to stop there. You can look for another suitable lot, plan another development project and embark on a pattern of build, sell and pocketing the profit. Some people even turn this into a full-time job. The sky's the limit. 

Conclusion

Small property development is a great way to grow your wealth when compared to buying existing or off the plan rental homes. It is also risky, but so is the stock market. And with a proven method or an experienced project manager, you reduce the risk. It is within reach, so act now! 

 

To put it mildly, Peter Kelly is enthusiastic about real estate with 10+ years experience as a residential property developer in Melbourne, Australia. When he’s not looking at properties, or visiting potential sites, Peter can be found online searching realestate.com. For him, it’s more than a job – it’s an obsession. Peter is a co-founder at Little Fish, where he currently heads up the projects side of the business.

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