Wealth Basics Rule # 1

Here's how property developers make money :

Have you ever wondered why developing real estate is one of the biggest profit games in town? Where do they make money? Is it by adding margins to every product used in construction? or Is it an over all margin added on to the cost of land and development(improvement). Well to put it very simply, property developer's make money out of their vision.

They collect land banks in areas of potential. Sketch up a potential project and do a lot of general subtle marketing. Press releases and media stories are written in favour and the hype start gaining momentum. Consequently the prices start shooting up. Individual projects are announced and bingo! in a matter of months the per sq feet rate get up 7 - 12 times or even more the initial price paid. Thats where the money is made and it just snowballs from there

How can this information help you. Well next time you read an article on how good a certain area is doing and how flats are priced in millions , don't think its for your information, its a mind game that big players are trying to play. They are trying to train your mind to understand that prices have gone up or are going up. What to do? Try shopping for real estate in similar areas or even the same ones but remember since the price is being created and does not exist, there are chances that the price fever would not have caught on 100% and you can get real estate at cheaper then market rates. Any real estate bought cheaper then the going rate is going to put capital appreciation in your pocket. Remember when you are buying from the builder you are paying retail price, when you are buying like a builder(fragments of land from land owner) you have greater chances of paying wholesale price. This rule has a huge upside. Normally people buy in an up coming area at an already high price area and wait for the prices to increase and ride the wave..

Imagine when you get in the trade before the the media story catches up i e , before the builder goes marketing his individual projects in the masses. Its a very simple approach but will make you money.

Wealth Basics Rule # 1: Try to pay wholesale prices for property while buying and get retail prices while selling!