Making Your First Million.pdf - Association of Net Entrepreneurs and ...

Making Your First Million
envisioning the possible. Raw scrubby land on the outskirts of the city purchased for
$50,000 a hectare becomes a rural subdivision selling for $195,000 a hectare. Billy-goat
country purchased for $200 a hectare becomes a $200 a night resort with unrestricted
views, 2 hours drive from Sydney. A financially strapped company can be acquired
outright by relieving the owners of the threat from its creditors and with a small injection
of cash, or divestment of its component parts, can be resurrected to earn millions of
dollars.
These opportunities are everywhere you look. Real money is made in developing an asset
rather than speculating. A business associate recently purchased an old house on a large
block for $92,000. While living in the house, he subdivided a block, sold it for $40,000
and applied some of the profits to renovating the house which he later sold for $145,000.
His net profit was around $50,000, but considering he'd started out with a deposit of only
$20,000, his real net profit was 150% and he had the benefit of living 12 months rent
free. Just yesterday I was offered a waterfront reserve house on a half acre block for
$220,000. The back block was subdividable with a value of $95,000. For an outlay of
$40,000 deposit and $8,000 in development costs I could make $80,000 profit in 12
months. Why not?
You can make money buying property with lowball offers, rather than developing, but
I'm uncomfortable with it. An old school friend has the policy of offering 70% to 80% of
market value to people selling property. He goes to the children squabbling over deceased
estates, or partners squabbling over divorce settlements and waves a thick bundle of
hundred dollar bills under their noses. Here's the money. Here's the contract. Take it or
leave it. Like Don Juan's prospective conquests, 99 out of 100 will say no, but if you ask
enough people you can make a lot of money. Another friend adopts a less aggressive
pose, submitting lowball offers in writing on selected properties and he has picked up
some serious bargains in recent years. I'm not overly fussed myself on lowball offers. It
has something of the taint of the vulture and in small beer terms reminds me of people
who arrive at 6 am at neighborhood garage sales, bullying the owner into submission.
More importantly it starts to run contrary to the Principles of Abundance and will
inevitably come back and bite you. Steer clear of it.
It can be a fine line. There is no black and white when you're trading in the misfortunes
of others. Axel, a large property developer, to whom we sold our half of the industrial
estate, recently purchased from the receiver, a company which tenanted one of his
buildings, for a dollar. He rebuilt the company, re-employing the same staff as well as the
previous owner and 18 months later sold it to the US parent company for $2.7 million. It
wasn't simple opportunistic exploitation. He saw an opportunity to develop an
undervalued asset and took it.
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