72 Year Old Don Made $159,983 On His First Property Deal
Most people in debt at 72 years of age would save and scrimp every dollar they had to become debt-free or to leave something for their children and grandchildren. Unlike Don from Perth. Looking for a solution to get out of debt quickly, Don attended Real Estate University.
Despite having to make a significant investment, Don decided to attend the event. While he gained the knowledge which could help him quickly get out of debt, a lack of confidence prevented Don from putting what he had learned in practice for 3 and half years.
Eventually, Don decided to pull the trigger and targeted areas that had residential development potential with zonings R30 or higher. He sent handwritten letters to 80 owners and received 7 responses.
Most of the 7 vendors stated they were not looking for an option. However one of them was happy to proceed with a formal agreement, aware that his site had development potential…in fact he believed it could sustain a 5 lot subdivision.
This agreement consisted of a 2 year term (24 months), a $1,000 option fee and a $1,010,000 option price.
Further enquiries with the State Planning Commission and the Local Authority confirmed not only what was discussed with the land owner but enhanced the benefits because of the Plot Ratio ( 0.6) on this site of 1012 sqm. The town plan permitted the construction of 607 sqm of floor area if multiple dwellings were to be constructed.
The unusually wide street frontage of 40.23 m and shallow depth of 25.15m would allow a very simple 5 lot subdivision to be approved, with each lot having its own street frontage of over 8m. It turned out to be a simple process that the council would fully support.
In essence, Don realised this was a “No Brainer.” He saw no reason to obtain a Development Approval and immediately on sold the property as a Short Option.
To find an ultimate buyer, Don advertised both in print and electronic media, highlighting the benefits of this option. He received calls from valuers, local real estate agents, builders, developers and eventually received conditional offers – 2 offers of $40,000, 1 offer of $110,000 and 2 offers of $165,000.
This eventually led to an unconditional assignment of $165,000 which was his original asking assignment price from which he knew the incoming assignee would benefit. As a result, Don made a neat profit and so did the owner of the property. Most importantly, for the new option holder there was still nearly 18 months outstanding before the option had to be exercised by the developer who bought the property. This left plenty of time to get his Development Approval through Council for the 5 blocks.
Here is a breakdown of the numbers leading to the $159,983 profit Don made.
Assignment Fee: $165,000
Breakdown of Costs:
Option Fee $1,000
Legal Fee $3,713
Advertising Costs $304
Development Approval NIL
Total Costs $ 5,017
Not only did Don make a tidy profit, but he was Debt-Free for the first time in his married life.
If Don could bank $159,983 and become debt free at the age of 72 for the first time in his married life, what more living proof does anyone need that this is a life-changing opportunity to become wealthy through real-estate without even owning it?