Thursday, May 28, 2009

What to Beware of when Making Money spotting in Property

One thing to be aware of when spotting or doing any property transaction is that the profit is not all ready calculated into the price.

Often, when owners or agents become aware that their property has "development potential" the price instantly skyrockets so that any money from a future development goes to them in the purchase price.

For example, the deal I am currently working on- the expected sales turnover of the 29 lots is about $4 million. Take out of that

$3 million purchase price and contributions
$200,000 agents commissions (if selling via agents and not through own marketing)
PLUS marketing fees
Plus interest capitilising at $16K a month * 18 months=
$70000 transfer tax/stamp duty
Possible $400K tax- still working out tax implications
Plus legal fees

Anyway from these numbers you can see that from these calculations there's almost no money in this deal. Ideally you want a $500,000 profit at least which gives plenty of cushion money for turns in the market and other unexpected happenings. And, it gives the developer a reason to pay you a spotting fee! For this one to be worth it the purchase price would have to be brought down at least to $1.5 million- making aquisition cost $2.5 million. There are many people who only do transactions like this when there is a good one million dollars in it for them, which is a good way to go.

Land speculation and subdivision isn't the only instance where this happens, it also happens in inner city or high demand urban locations where the land can be developed, and in conversions from aparments to condos or strata titling.

All it means is that there are deals out there that are advertised as "Development Opportunities" which aren't good deals and won't make you any money. You still have to walk away from some, even when spotting. But there are also others out there that are worth it, and with a little negotiating you can come out a good $50,000 to $500,000 richer.

Wednesday, May 27, 2009

How to Make Money with No Money in Property by Spotting

Today I drove to a potential development site- it's an approved subdivision which the bank has reclaimed through foreclosure. It requires almost $1,000,000 in contributions to the government and the asking price is $2 million. That's alot of money!

Wait, don't you have to have $3 million to make money from this deal? Don't you have to qualify for $3m of financing? The interest payments on that would be unbelievable!

The answer is NO!

If you wanted to do this development yourself those obstacles would be overcomable, but for the beginning entrepreneur with alot of heart and not the financial wealth to take on a big project like this, there is a much better way to make money which goes by the name of bird dogging, scouting or spotting.

It works like this: you find a potential deal, verify that it is a good deal and let a much more experienced and wealthy developer do the work for the bulk of the profit. Why would you be willing to let so much potential money go? Well what do you think of a quick $30,000? What about $50,000? More? This sort of cash is normal in spotting fees for this size development.

Spotting is a great strategy if you have enough knowledge to know what is a good deal, but not the knowledge or money to pull it off yourself. You may even find a developer willing to show you the ropes in exchange for a smaller spotter's fee, which is worth it in the long run. And they may be willing to fund your future developments.

These sort of deals aren't available everywhere, they suit markets where the population is growing, or for some other reason the demand for new housing is increasing. But they are out there.

While you might not be the biggest fish in the pond, you connect a developer with a deal, they reward you, and then provide housing to people who reward them. It's a win win win! You and the developer make money and people get quality housing! Best of all you get your spotter's fee up front which means you can make some quick money.

Tuesday, May 26, 2009

Why Would you want to Make Money?

Why do I want to make money? Why do you want to make money? It's not about the cash. I am currently reading "Cracking the Millionaire Code" by Robert Allen and Mark Victor Hansen. They say

"We don't encourage anyone to love money. We encourage everyone to love the good that money can do."

Think about it:

How many people could you help with a spare million dollars each year? What service could you give? How many starving people could you feed? How many homeless people could you shelter? Could you show them how to make it for themselves?

What sort of home and lifestyle could you have for yourself?

How could you help your children, family and friends?

How much time could you give to those you love?

What could you do to help others knowing you never have to worry about money again?

Money is not about having the most cash in the world, it is about taking care of yourself, those around you and helping people. That is where real wealth is.

Monday, May 25, 2009

Ways to Make Money (and wealth)

Now that I've decided how much money I want to make the next step is to get an idea of how I'm going to earn it.

If you don't make much money now, don't worry because it is not a limit on your future earning potential. The amount of money you make today will not stop you from earning more money tomorrow. It might take a little bit of time, but it is possible.

One piece of advice Bob Proctor gives is to think of the wealth you want and ask yourself:

"What service can I give that is worthy of that amount of money?"

Money is a result of solving someones problem, or filling a need. When you help people, they reward you, usually with money. Think about it. Fast food chains help people by giving them food quickly, it's convenient, it's fun for the kids, and what do their customers give them for it? Money! The guy who fixes your car solves your problem of your car not working, what do you give him? Money. If you want wealth, learn to how solve people's problems.

Some questions to decide what to do to make money:

1. What need do I see for a product or service?
2. What do I enjoy doing that can be turned into a source of income?
3. Who do I know that has achieved the amount of money I want, and how did they do that?
4. What money making opportunities am I all ready aware of?
5. How can I make the most of my current situation to create wealth?

Making money can be easy. Once you look for ways to make money you'll be surprised at how many wealth building opportunities are around you.

“Opportunity is missed by most people because it is dressed in overalls, and looks like work.” - Thomas Edison

Friday, May 22, 2009

How Much Money do you Want to Make?

One question we all have to ask ourselves is "How much is enough?" What are our financial goals?

Bob Proctor says that our financial goals + expenditure = the money we want to be making. So if your goal is $10,000 surplus a year, and your expenditure is $60,000 a year then your income goal will be $70,000. Likewise, if your financial goal is $100,000 surplus and your expenditure is $120,000 then the money you want to make is $220,000.

One way to calculate how much money we want to make is to write down everything we want. Then go through each item and find out how much money that will actually cost. This way, when you are thinking about your financial goals or reading your goals, you have a thought to associate it to, it actually means something. If you want to make money, numbers aren't motivating, but images are. Think about the lifestyle you want to live. What vacations do you want? Would you like to own your house outright, free and clear? What sort of house do you want anyway, and where? How do you want to give to others? What sort of clothing, car, and food do you want to provide for yourself and your family? How often would you like to eat out? How much money do you want to have left over after all of this?

The next step is to take this wealth goal into how you are going to make money. What vehicle will you use? What will you do to get it?

Sometimes short term goals are necessary to help us get on track. If our long term money goal is $220,000 a year, but we currently make $60,000, we can set small goals that when we follow will lead us to our $220,000 a year goal. In the upcoming posts we'll discuss what to do to actually make that money.

Thursday, May 21, 2009

Wealth and Making Money Quote

"Ultimately we know deeply that on the other side of every Fear is Freedom"

-Marilyn Ferguson

Wednesday, May 20, 2009

How to Make Money: who do you listen to?

One of the things I've noticed is that everyone everywhere seems to tell me how to make money. But what do they know about making money anyway?

Bob Proctor says that the person who gives you advice will generally tell you how to make the same amount of money they are making. Great! Now before I take advice from anyone, I check how much money they are actually making before I do what they say.

That's why it's so important to get wealth information from successful people. It's important to have successful mentors. One thing I value is mentors who make money quickly and in the long term. That way I know if I follow their advice, I'll make money quickly and I'll make ongoing wealth.

In this site I'll be putting my own experience with making money and wealth, as well as FREE information from others like Bob Proctor, Robert Allen, and Mark Victor Hansen. Get some great info and tell me what you think!