[Podcast] How property development helped create my wealth

Are you interested in getting involved in property renovations or development? 3 toxic habits that sabotage your property investing

In today’s show I’m sharing an interview where Justin Gehde and I talk about how I got started in property renovations and development.

This is part of the summer series of my show, where, while I’m on vacation, I pull out some of my favourite past podcasts not previously shared on this show.

So today there are some great hints for you because I discuss many of the lessons I learned and some of the things that I got wrong along the way.

How Michael Got Started With Property Development

  • Michael bought his first investment property in the 1970s. He paid (a half share of) $18,000 for it and was got $12 a week rent.
  • His second property needed a renovation. He got involved in development in the 1980s. He had good partners and mentors that helped him until the recession hit. 41378319_l
  • Then he started helping others in the late 1990s helping people with property development management and doing development for clients.
  • Michael is still very actively involved in property development. He enjoys creativity and finding solutions for problems.
  • He takes pride in his large developments that have changed the face of some suburbs.
  • Michael thinks property development is the best way to use money and buy assets cheaply. He doesn’t flip, instead he renovates and holds on for the long term.
  • In the 1980s Michael was very brave and maybe a little stupid, but he took some big risks and the rising market got him through
  • He has learned from mentors and he has seen partners go bankrupt and he is a much more careful investor.
  • A common problem Michael encounters with clients is they have unrealistic expectations.
  • His advice is to start small do the renovation and then move up.
  • The importance of finding investment grade properties in suburbs that outperform the averages and where the jobs are and where people have more disposable income. construction repair maintenance
  • How today Michael conducts the orchestra and still has fun at work and undertaking property development.
  • Michael still enjoys the marketing, research, recording the podcast, dealing with the media, and strategic actions.
  • Michael and his property development management business became experts in certain municipalities, so they know what does and doesn’t work.
  • How experience makes a difference in property developments and creating the type of property that tenants want and what the end product should be.
  • Location, owner occupier appeal, demand for a wide demographic of people who want to rent or buy there. Investment grade property.
  • If starting over again, Michael would educate himself more and learn from people who have already done what he wants to do.
  • Rather than flipping, property developers should be adding value, refinancing and keeping their properties. This way they are much more likely to become wealthy.

Links and resources:

Our favourite show quotes:

“Property investment and development is a game of finance and having the right cash flow.” Michael Yardney Businessman Standing Among Chess Pieces Looks Through Binoculars

“You have to have money set aside for a rainy day because the finance markets can turn very quickly.” Michael Yardney

“I’m actually having fun sitting back a bit and enjoying the results.” Michael Yardney

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About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'[Podcast] How property development helped create my wealth' have 4 comments

  1. Avatar for Property Update

    January 11, 2018 Preetha Vijayan

    Hi Michael, I absolutely love your podcasts and the advice you are giving is absolutely priceless. I am so grateful for having coming across you and your teachings. I had a question on LMI. While I have been advised to put down a 20% deposit, I have been told by a few friends that I can get into the market by paying less deposit and LMI (reasons are to enter the market faster, the gains in a rising market will more than offset the LMI paid, and finally it allows the borrower to use more of the bank’s money than your own money) It is an interesting perspective, and one that I had not thought of before. The herd mentality is to pay the 20% deposit. Was keen to get your thoughts on this. I have recently put down 10% deposit on a place, which will be completed in mid 2019. Is it worth me saving up the other 10% deposit or can I pay less deposit, pay LMI, and then use some extra funds for other investments? Would love to hear your feedback on this.

    Many thanks
    Preetha

    Reply

    • Avatar for Property Update

      January 12, 2018 Michael Yardney

      Preetha
      Thanks for the words of encouragement.
      Yes putting a 10% deposit down and using LMI makes your money work harder because of the higher leverage.
      But there is an underlying assumption there – that your property is increasing in value.
      Now it seems that you’ve bought a property off the plan and that really concerns me.
      I’m not sure which state you are in, but in many locations more than 25% of properties bought off the plan do not value up at the contract price on completion.
      In other words the owners have overpaid and have lost out – so they need to find more money to settle – just because the property is worth less than they paid doesn’t allow them to get out of the contract.
      But your big issue is most banks will only lend up to 70% in almost all of the postcodes where you can buy off the plan – because they’re also worried about values falling in these locations. So LMI doesn’t even come into question.
      My suggestion is to save as much as you can before settlement – you may need it plus more, and double check your purchase – was it the right one. Is there a way out.
      Like the banks, I’m very, very concerned about off the plan properties settling in 2018 and 2019

      Reply

  2. Avatar for Property Update

    January 9, 2018 Charles

    Thanks for these great weekly podcasts Michael – I’m really getting a lot out of them – keep up the good work
    As a way of saying thank you I just left you a 5 star review on Itunes

    Reply

    • Avatar for Property Update

      January 9, 2018 Michael Yardney

      Thanks Charles
      It’s positive feedback like this that keeps me enthused to continue providing this content

      Reply


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