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Cashflow may not be something you first think of when you get into property development, however it becomes a crucial component when you become a full time developer and need ways to generate an income between profit events.
What types of projects are good for cashflow? There can be many but one stands out for its ease of getting built and its popularity with a certain segment of the market.
Henry Vila from Stone Horizon, a developer and a builder, talks to us about modern style rooming houses, and his lessons from being a property developer and a builder.
We talk about developing for cashflow, how to navigate your way through the current environment in the building industry with escalating build costs and time blow outs and how a developer can get the most out of a builder.
Keep an ear out for Henry’s view on why it is difficult to just compare price when deciding on who the builder should be on your project…
Property Development Training
If you are interested in learning the fundamentals of property development, in your own time and at your own pace, then be sure to head over to www.propertydevelopertraining.com and take a look. I take you step by step through the development process so you know exactly what is needed to find a site, run a feasibility and complete a small scale property development, be that a duplex or 3 or 4 unit site.
So head over to propertydevelopertraining.com and take a look… I would love to see you on the inside…
Property Developer Quiz
Keen to find out how ready you might be to become a developer? Then take the Property Developer Quiz (https://www.propertydevelopertraining.com/quiz) and get a sense of where you are at…
Become a Million Dollar Property Developer
Grab my book Become a Million Dollar Property Developer about my journey into property development. This book is ideal for anyone who intends to get into small-scale property development and wants an insider’s guide to successfully obtaining wealth, fulfilment, and glory.
In this book, Justin will share how he succeeded in delivering a 20-townhouse project on his first property development project and what he learned along the way.
Social Connection
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Property Developer Podcast LinkedIn – https://www.linkedin.com/company/property-developer-podcast
Links
Stone Horizon – https://stonehorizon.com.au
Episode Summary
In this episode, Justin speaks with Henry Vila from Stone Horizon about the importance of property development for generating cash flow. Henry is the founder and managing director of Property Development System, a company that helps property developers create profitable projects. Henry shares his experience and expertise in property development, as well as his insights into generating cash flow through property development.
Top 5 Points:
- Property development is a powerful tool for generating cash flow and creating wealth.
- It’s important to understand the different types of property development projects and the risks and rewards associated with each.
- Cash flow is the lifeblood of any property development project, and it’s crucial to plan for it from the outset.
- Financing is a key factor in property development, and developers need to be strategic in securing the right type of funding for their projects.
- Effective project management is essential for successful property development and generating cash flow.
Types of Property Development Projects
Henry explains that there are three main types of property development projects: renovation, subdivision, and construction. Each type of project has its own risks and rewards, and developers need to understand these factors when deciding which type of project to pursue. Renovation projects involve updating or improving existing properties, while subdivision projects involve dividing larger properties into smaller lots. Construction projects involve building new properties from scratch. Henry emphasizes the importance of doing thorough market research before embarking on any property development project to ensure that it’s the right fit for the developer’s goals and resources.
Planning for Cash Flow
Cash flow is the lifeblood of any property development project, and Henry emphasizes the importance of planning for it from the outset. He recommends creating a cash flow forecast that includes all potential income and expenses for the project, such as construction costs, financing costs, and marketing expenses. This forecast should be regularly updated throughout the project to ensure that cash flow remains on track. Henry also stresses the importance of having a contingency plan in place for unexpected expenses, as well as having a realistic timeline for the project’s completion.
Financing for Property Development
Financing is a key factor in property development, and developers need to be strategic in securing the right type of funding for their projects. Henry recommends exploring all financing options, including traditional bank loans, private lending, and joint venture partnerships. He advises developers to have a solid business plan and financial projections in place when approaching lenders or potential partners, and to be prepared to negotiate terms that are favorable to both parties. Henry also emphasizes the importance of keeping an eye on interest rates and being prepared to adjust financing strategies as needed.
Effective Project Management
Effective project management is essential for successful property development and generating cash flow. Henry stresses the importance of having a clear and detailed project plan, as well as a strong team of professionals to help manage the project. This team should include a project manager, architect, builder, and other relevant professionals. Henry also recommends using project management software to help track progress and manage timelines, and emphasizes the importance of regular communication and collaboration among all team members.
Maximizing Profitability
Ultimately, the goal of property development is to generate cash flow and create wealth. Henry provides several tips for maximizing profitability, including:
- Minimizing construction costs by using cost-effective materials and designs
- Being strategic in choosing the location and type of property development project
- Utilizing effective marketing strategies to attract buyers or renters
- Managing risk by having a solid business plan and contingency plan in place
- Staying up-to-date on industry trends and regulations
