I don’t know these guys, but I do like what they have to say: “our philosophy on creating and sustaining income without a job: Business for Cash Flow and Real Estate For Wealth” …
… it pretty much sums up how I achieved my $7 million in 7 years; maybe it’s how you’ll also make yours? 🙂
… but, you don’t know where to begin?
At least, that’s the case for IJ who e-mailed me:
I’ve always wanted to find some sort of mentor. It would be great that everyone had a mentor that can help with advice and bouncing ideas off of … [people who’ve] owned their own businesses, residential and commercial RE. I want to get more involved in commercial RE and do not know of anyone who I could turn to on how to get started.
I’m a great fan of mentors; but, when you can’t find one then you have to make do with getting info. from a variety of sources: friends, accountants, attorney’s, investor’s clubs, and – of course – Realtors.
This takes time and energy, so in the meantime, you can refer to the resources on this site and others …
For example, you can start by checking out these posts;
If you are interested in property development:
http://7million7years.com/2009/09/09/ive-been-out-shopping/
http://7million7years.com/2009/09/16/can-your-real-estate-development-project-make-money/
http://7million7years.com/2009/09/23/how-much-money-can-you-make-developing-real-estate/
And, these posts if you are interested in how to analyze a commercial property deal (offices):
http://7million7years.com/2008/12/22/anatomy-of-a-commercial-re-investment-part-1/
http://7million7years.com/2008/12/23/anatomy-of-a-commercial-re-investment-part-2/
http://7million7years.com/2009/01/05/anatomy-of-a-commercial-re-investment-part-3/
And, you should follow up these resources if you are interested in multi-family-type ‘commercial’:
Dave Lindahl: (I bought and USED his ‘multi-family millions’ course to help me analyze 100’s of potential deal (but, in the interests of full-dsclosure, I didn’t end up buying any, although I already own millions of dollars of residential RE, but my largest is only a quadraplex)
Dolf de Roos: I have bought a number of his products, including his Commercial RE audio course and some s/w … more basic than Dave Lindahl’s course, but helpful nonetheless, especially for noob’s.
To be fair, a few others consider these guys to be ‘scammers’, but I don’t make any money from either – have bought their material at full price and found it useful, so what more can I say?
Oh, and here is a guy who is definitely NOT a scammer and has some useful stuff, too: John T Reed.
Of course, you could also try and do what IJ did:
E-mail me with your questions … I don’t mind, if you don’t mind if I [perhaps] choose your question for a future post 🙂
Once my honeymooner guests agreed that purchasing a home would be a good investing goal, the question became how much equity to maintain?
I explained that if you have an empty glass, worth $100 (let’s say it’s a collectors’ item) representing your house then it makes no difference how much fine wine (also a collector’s item at $100 a glass) you have poured into it as to the future value of the glass …
… the glass can be full or empty, but if collectors’ glasses double in value every decade, it will still be worth $200 in 10 year’s time.
Of course, after consuming a few glasses of that fine wine, another question arises:
What happens if I put less money into the house (or other real-estate)?
Simple, you have to borrow the rest: less deposit, more borrowings/mortgage … more deposit, less borrowings/mortgage.
Then, in deciding exactly how much wine to pour into your glass, you think of the next logical question:
What’s the ideal amount (or %) to borrow against the property i.e. how much deposit should I put in?
Given the current ‘crisis’ in domestic RE values, it’s popular to imagine a high number: 20%? 50%? 100%?
But, it’s not so long ago (and, I wager it won’t be more than a decade before it comes around again) that it was popular to imagine a low number: 10%? 0%? Even negative 10% (as people borrowed 100% of the property PLUS closing costs)?
But, what’s the right number?!
Surprisingly, at least to me, there’s no magic ‘right’ number …
… once you realize that it matters not what equity you have in the house as to how your future wealth increases – based on the appreciation of such fine real-estate.
So, another question forms instead:
What does it cost/save me if I put in more/less money into the RE purchase?
Well, we know it does not cost you future capital appreciation, but it does cost/save you exactly what the bank would charge in you in mortgage interest and ancillary charges … circa 4% – 5% these days.
So, let me ask you two closing questions:
1. Do you think that you can do better than getting ‘free money’ by owning real-estate that appreciates, perhaps even doubling every 7 to 18 years (depending upon whom you believe), leaving you with virtually ALL the excess over the original purchase price?
2. Do you think that you can invest money that would otherwise cost/earn you only 4% – 5% for more than that [Hint: how about some more of that yummy real-estate? Failing that: stocks; business; P2P lending; etc; etc; etc? But, we covered this question last week ]?
… at least those are the questions that I put to our house guests 🙂
What do you think?
My wife just got back (well, just before our Noosa trip) from a trip overseas to attend her nephew’s wedding; and, the young happily married couple decided to spend part of their honeymoon in Australia … so, they are staying with us right now!
This was an opportunity for me to interfere in their financial lives … naturally, I couldn’t resist 😉
It’s also an opportunity for me to share my financial plan for our younger readers, whether single or married.
The plan is simple:
Step 1: Start working!
Step 2: Use your pre-work spending and living standards as a guide to ensure that you save at least 10% of your gross salary; preferably more.
Step 3: No matter what your Step 2 Income and Expenditure, save at least 50% of any future salary increase
Step 4: That includes any ‘found money’ such as: change found on the street; tax refund checks; small handouts/inheritences from friends/family (naturally, you will ‘up this’ to saving 95% of any LARGE handout/inheritence); etc.
It won’t take too long to actually have some money (perhaps for the first time in your life) to think about actually INVESTING.
So, what to invest in? Stocks; car parks; italian art; … ?
It’s simple: your own home!
It will probably be a small house or condo to start with … possibly with some ‘fixer upper’ potential …
But, what about the 20% Equity Rule and the 25% Income Rule, which will ensure that you can only afford to buy a shoe-box (literally) at this early stage of your financial life?
You forget them for your first home …
… and, replace them with these guidelines:
– Put as much equity into your house (by way of making a deposit) as you have savings (you’ll want to keep a little buffer against immediate expenses)
– Borrow as much as the mortgage payment that you can afford, which will be the amount per month that you are currently saving (of course, you’ll want to keep a little buffer against extra expenses).
When you (eventually) get tempted to ‘trade up’ to a bigger house, that’s when you apply the 20% Rule and the 25% Income Rule!
But, shouldn’t you invest in something else first? Perhaps you’re not even married yet and can happily rent for a while?
This is true: but, buy the condo anyway … then you can evaluate if your rent is so cheap that you should rent out the condo for a while before moving into it. Same applies if you move to another location: rent out the house/condo and rent for yourself elsewhere until you are ready to trade up (or across).
Why?
Let’s decide whether, over the course of your life, real-estate will go up in price or down in price? The answer for all of history has been UP (over a sufficiently long period).
Decide whether you will ever want to own your own residence? Again, the answer is YES for the overwhelming portion of humanity (and, even if you think not, I guarantee that your eventual spouse will have a very hard go at convincing you otherwise).
So, unless you have an overwhelming reason to believe that RE won’t go up in price for the next X month/years, then you are compounding your money at RE’s typical growth rate (6% … depending upon who you believe and where you live) TIMES the leverage that the bank is giving you LESS (your mortgage payment/costs – rent you would have otherwise paid).
Run the numbers; it’s a VERY good/safe rate of return 🙂
Ryan from Planting Dollars asks:
Having been raised by self made real estate millionaires it’s not shocking that I agree with the vast majority of what you have to say. The reason I’m emailing you is because I was wondering if I could get your advice.
As a 23 year old recent college graduate I understand the power of real estate investing and building businesses, but at the same point would like a nomadic lifestyle and be able to travel while living frugal at a young age. In my experience real estate and most business ventures aren’t possible with this lifestyle. So I’m simply wondering:
If you were in my situation, how would you perceive this challenge and what types of businesses would you pursue?
Simple: anything internet!
Specifically, anything internet that trades in downloadable products and services (information products are ideal), or of the ‘virtual infrastructure’ type (e.g. FaceBook) … of course, once you become successful, you will need staff and support of the financial kind, and these require phyical access more often than not [AJC: Venture Capitalists are soooo 90’s 🙂 ].
That’s the short answer; now for the long answer 😉
The first thing I would suggest that Ryan do is to ask the “self made real estate millionaires” who raised him for their advice … after all, they’ve been there / done that … know Ryan better than possibly anybody else … and, being a parent myself I have no doubt that they ABSOLUTELY have his best interests at heart!
As to the second part of Ryan’s question, which asked whether I would “place travel and new experiences in [my] twenties as more important or less important than investing and capturing the time value of money?”
The easy answer is that (by some coincidence) I just addressed this in some small way in yesterday’s Video-on-Sunday post …
…. but, the harder answer is “it depends”:
– I would rank those Life Experiences very highly
BUT
– If the desire to be an entrepreneur burns bright, and you have a rip-snorter of an idea just bursting to get out … well THAT can be the “new experience” that Ryan mentions, and it may very well more than make up for itself by funding your future travels.
I would be willing to delay a boringly ‘normal’ savings plan a little for those one-of-a-kind of Life Experiences.
Let’s say that you do decide to compromise, by being that nomad, yet starting a business; what’s the ideal business for this sort of traveling, hands-off lifestyle?
As I said above, anything Web, however I suggest that you buy a copy of the 4-Hour Work Week first!
But, I would also say not to be so quick to discount real-estate …
… I maintained 5 condo’s and a small’ish office block in Australia whilst I was living in the USA.
Buy anything by Dolf De Roos and Dave Lindahl, both of whom claim to own real-estate in far flung places (Dolf across the world, and Dave across the USA) and learn all you can about ‘hands off’ real-estate ownership; it can be done.
Of course, Ryan still has direct access to Millionaire RE mentors … so, he should first ask his parents what they do with their RE investments when they wish to travel?
OK, so he wants you to buy five houses this year … and, he gives you the quick ‘hard sell’ at the end … but, the basic philosophy – to me – is sound:
– Houses are depressed in the USA, but so are interest rates,
– Unless the USA ‘double dips’ prices will begin to go up (when?)
– You can fix an incredibly low interest rate on your primary residence (can the bank rewrite the mortgage if you move?)
– You MAY be able to receive enough rent to cover most/all of the mortgage
– Who says you need to buy five houses (except for this Realtor!?) … just think about one for now
Do the numbers for your area/s of interest (price of house, monthly cost of mortgage, likely rental income, other expenses such as 6% – 9% property management etc.) … if you can even come close to breaking even, could you find a better return on your deposit plus the cumulative cost of any monthly shortfall (or gain of any monthly excess)?
Now, run the numbers again assuming that the US market stays flat for another 5 years before some sort of rebound … maybe it still makes sense?
Have you run the numbers? If so, what do you think?
But, what about the other financial question that my son asked while we were on vacation?
Well, we were walking along the beach and Bill, the shaved ice vendor, drove past with his little all terrain vehicle pulling his ‘shop’ behind only to stop a few yards up the beach to tempt my son – and, the many other children running along the sand and swimming in the warm surf.
Naturally, I quickly became $3.50 poorer and my son had his paper cone filled with shaved ice with various color sweeteners poured over it (he chose ‘rainbow’ flavoring), which got us talking:
You see, it’s popular folk-lore that Bill, who has been selling his flavored shaved ice along the beach for 20 to 40 years, owns many of the apartments in the vacation rental buildings all around [AJC: check out the aerial shot in yesterday’s post] … if true, then Bill is the poster-child for the Wealth Alchemist i.e. turning temporary cashflow into long-term assets.
It’s not hard to see that Bill turns over thousands of dollars a day, most of it costing him nothing (little staff, few overheads, little-to-no-cost-of-goods-sold), after all, how much can ice cost to make?!
Instead of spending all of that money, it’s not a great leap to assume that Bill saves up enough for a deposit to buy a property every now and then; we figure $1 million worth of property each year (with 20% initial equity).
Here is my son’s question:
“Would he pay cash for the properties, or would he just save up enough for a deposit and borrow the rest?”
Now, this is a seemingly simple – yet terribly interesting – question; one that we could labor over for many posts … instead, we’ll look at this another way, by asking:
“Does Bill need the property for income now or for its future value (hence, future income)?”
The answer is clear: Bill has plenty of income now, but what does he do if his income stops?
Presuming that he can’t rely on being able to sell his business (for example, the council could decide that they no longer want people peddling ice on their beaches), then Bill will probably want his properties to generate a replacement income “one day”.
So, which would do that better? When Bill moves into MM301, it’s likely that owning the properties outright and living off the rental treams that they throw off will be best …
… until then, Bill has to (in my opinion) work on the strategy that will produce the most properties by the time he wants to retire.
So, I had to explain the concept of leverage to my son:
SCENARIO A: If you purchase a property for $100k CASH and it doubles in 10 years, then you have $200k of property. Well done!
SCENARIO B: But, if you purchase TWO $100k properties, putting $50k deposit into each and borrowing $50k for each from the bank, then in 10 years (assuming they both double), you now have $400k of properties, of which you owe the bank $100k (assuming that you haven’t paid down any of the loan in the meantime), leaving you with $300k of property … a $100k improvement over Scenario A.
At least, that’s what the property spruikers would have you believe …
… because, they have conveniently forgotten that in Scenario A, you also have some rental income (after, say 25% costs) coming in, whereas in Scenario B that income would be largely offset by interest owed to the bank.
The question is, is that differential in income ‘worth’ $100k over 10 years?
Let’s assume that we can get a 5% return from our Scenario A property (after costs), giving us $5k a year initially (when the property is worth $100k), increasing over time to $10k a year (when the property increases to $200k in value). It doesn’t take a genius to figure that this comes to less than the extra $100k that Scenario B gives us (if you assume an average $7,500 per year rent for the 10 years, we are comparing $75k in rent for Scenario A to $100k in additional capital gain for Scenario B).
Now, add the benefits of:
– 80% gearing (i.e. only making a $20k down payment in our example), which should buy you 5 properties instead of Scenario B’s 2 properties (cost = $500k; worth in 10 years $1 mill., less $80k loan on each = $600k v $300k for Scenario B and $200k for Scenario A. Get it?),
– Increasing rents offsetting fixed interest rates (possibly producing some positive cashflow from each of our 5 properties as time passes),
– Tax deductibility of any excess of interest over income in the early years (a.k.a. negative gearing),
– And, any additional tax and depreciation benefits of 5 properties v only 2
… and, it’s just possibly a ‘no brainer’, even if that does make some of those scummy spruikers right 😉
But, how does Bill pay his bills?
Well, that depends on how much excess of income the properties produce by the time Bill is ready (or has) to retire …
… if insufficient to pay Bill’s bills, he can sell enough properties to pay off the bulk (or all) of the bank loans, thus forcing a positive cashflow situation (assuming the properties aren’t total dogs, which is highly unlikely in this well sought after tourist area, which boasts near 100% year-round occupancy) and that (after a reserve to cover costs of vacancy, property management, and repairs and maintenance) is his infltation-protected income for the rest of his life.
Then Bill can spend the rest of his days lazing on the beach … buying shaved ice from the next shmuck who chucked in his chance at earning a college degree for the life of a beach bum 🙂
Guys, as the economy improves (if it improves) interest rates will surely rise, as they already are in other countries.
If you haven’t already done so, seriously think about buying some fire-sale real-estate and locking in the the interest rate for 30 years; one strategy – especially if the banks won’t let you take out a 30 year fixed rate mortgage on an investment – is to buy your NEXT home now (it need not be any bigger/better than your current), taking the 30 year fixed on that one, and keeping your current as a rental.
I’m not sure if that’s exactly what Lee was thinking when he asked:
Although the market in our area has held up fairly well through this housing crisis, it’s definitely a buyers market. I don’t think I’d get top value for my home. So, I’ve seriously been considering renting it out after we move. If I did rent it, then I could go a couple different routes:
1. Refinance current home to 30 year (to help cash flow) and take enough cash out to put 20% down on our new home.
2. Refinance current home to a 30 year but take no cash out to get the payment down to a very low amount to have a very good positive cash flow. Then put 20% down out of pocket on the new home.
3. Take out a home equity loan on the current home just to cover the 20% down payment on the new home loan (30 year).
4. Just go ahead and sell our current home so I can take advantage of the tax free capital gains … I could then use part of it to put 20% down on our next home … and use the remaining as a down payment on one or two rental properties.
5. I have to throw in one scenario just because of that little guy I call Mr. Conservative that sits on one of my shoulders, lol! I could just pay my current home off within the next 2 years or so, then rent it out with a large cash flow, and use that cash flow to pay the mortgage of the new home we buy.
6. Maybe something I’m not even thinking of?
I think I see a case of paralysis by analysis coming on, so we had better head this off at the pass …
… while I can’t give direct personal advice (as I told Lee), I can point out that in cases like this it’s always good to ask yourself a couple of key questions before Mr. Conservative starts to get very vocal (in your subconscious) and you end up taking no action at all, so I suggested that Lee run some numbers:
a) What would be the situation on your current home, if you just took out a new (or refi) FIXED rate 30 yr mortgage, and put tenants in … what would be your new monthly mortgage payment and what monthly rent could you conservatively [it’s good to have Mr Conservative on your shoulders] expect?
b) After pocketing the excess of 75% of rents over mortgage from a) above – or, making up the deficit on the excess of mortgage over 75% of the rent – how much per month do you think you could save from your other sources of income assuming for the moment that you have FREE accommodation for yourself somewhere?
[AJC: the 75% of rents is to allow a buffer for vacancies and other costs of renting … just a very rough approx. for now]
Once you answer these two questions, my feeling is that the best scenario for you will become obvious … I hope 🙂
In Lee’s case, here are his current numbers:
3 bed / 2 bath 1450 sq ft. home in a great location.
Cost Basis: $158,000
Current value: $210,000
$96,000 (9 years 6 months) remaining on a 15 yr mortgage @ 4.625%
Current P&I repayment: $1,042 per month
And, if he refinanced the $96k remaining balance his bank has given him two options for a 30-year fixed loan:
$508/month @ 4.875% Closing costs: $2,000
$493/month @ 4.625% Closing costs: $2,700
For rent, Lee thinks “being ultra conservative” $900/month to $1100/month, which means:
Using 75% of excess over mortgage ($300) and assume living in FREE accommodations, I could easily save $3,000/month because that’s what I save currently even with my $1042 mortgage. Throw in not paying our current mortgage and having $300 in additional cash flow and $4,000+/month would not be unreasonable.
For now those are the numbers, although I have to say the 75% of excess over mortgage number is probably high considering taxes and insurance on this place are about $200/month. But as you said, these are rough numbers for now.
So, Lee is getting closer to being able to make a meaningful decision; here are the steps that I suggested:
STEP 1: OK, it seems to me that if you decided to keep your current home as a rental, you would lose money if you stuck to your your current $1k pm mortgage, and produce a positive cashflow of $100 to $200 p.m. if you refinanced.
STEP 2: It seems to me that your $3k pm savings rate will be enough to cover the expected $200k mortgage on your new home. Right? BTW: You WILL fix for 30 years, too (because this will become an ideal 2nd rental, eventually)?
STEP 3: Next, all you need to think about is how to raise the deposit; well, if you don’t have it now, go back to Step 1 and revisit these numbers, assuming that you refi, say, $150k instead of $96k. I’m guessing that you’ll be close to B/E – or, a slight monthly loss – on the rental?
STEP 4: You keep 25% of the rent (plus another $200, say) to cover taxes, ins, and contingencies PLUS you have plenty of excess monthly savings to cover you, until this ‘provisioning fund’ builds up.
Now, what do YOU think Lee should do?! Here’s what he thinks:
I think the smartest thing would be to refi without taking any equity out so that I have a nice cushion of cash flow. I would then need to come out of pocket with the down payment for the new home which I should be able to do, and even if I need a little help, I could always get a small home equity loan on the rental temporarily. But I feel pretty confident I could raise enough cash to cover the down payment without having to do that.
My next step…develop my plan of action.
Take Lee’s advice: model these questions to develop a plan of action that works for you … and, take it! 🙂
Last week, I posted the second installment on my series about real-estate development under the ‘teaser’ headline: how much money can you make developing real-estate?
But, of course, I didn’t actually answer the question!
And, that’s simply because I don’t know …
… it depends on the project, and what you are trying to achieve.
But, I DO know two things:
1. Typically, real-estate developers work on:
– a 20% to 25% profit margin on residential real-estate projects,
– a 35% profit margin on commercial real-estate developments,
– upwards of 50% profit margin on land subdivisions.
2. I also know the EXPECTED profit margin on the two projects that I’m working on.
What that expected margin on my projects will translate into is anybody’s guess, because it depends on so many RISK FACTORS – which is why real-estate development is (in my opinion) a Making Money 201 income acceleration activity, not to be taken lightly.
But, I can share Tab 3 of my spreadsheet, which shows:
– That there’s about $2,000,000 (Australia … approx. $1.8 million US dollars) of land related costs: I estimated this as $1.5 mill for the actual purchase price of the property, plus $500k allowance for taxes, closing costs, and the necessary project permits. Obviously, I will put in better estimates for some of these costs, as they come to hand.
– I’ve assumed that the bank will lend me 60% of the total project development cost of $17.9 mill. (which includes, the land component, all the costs of consultants, permits, etc., and the building costs). I’ve since spoken to the bank and they will lend closer to 80% of the total build costs, PROVIDED that I sell enough condo’s ‘off the plan’ to cover their total debt.
– Based upon the 60% that I have used in the spreadsheet, I will either need to come up with $7,160 million of my own money (i.e. the $2 mill. that I will have already spent on the land and permits, etc. PLUS the $5.160 million ‘shortfall’ in bank funding) OR find a mezzanine lender who will lend me some of this (at inflated interest rates, naturally) OR find one or more equity partners, who will put up some of the $7+ mill. shortfall in return for a good chunk of the project profits.
– In this case, I’ve assumed that we sell the condo’s in year 3 (more likely – hopefully – to be a 2 year project) and pay back the bank and this spreadsheet assumes 10% interest rate (although, that can be easily changed), leaving $10.6 million to pay back my and/or the investors’ equity and (hopefully) leave some real profits.
– I’ve assumed that we’ve had to pay some interest at ‘preferred rates’ (read: higher interest rates) on my (and the investors’) equity, which leaves a ‘real profit’ of $892k … but, don’t forget that the preferred interest is also part of our (i.e. the investors’) profits … so, they need to be added together.
– Now, I have a management partner who is a builder (but, won’t be physically building this one), who is providing time and expertise in return for 30% of the profits of the venture. He has a sweet deal: not risk (he provides NO funding and only his payment is ‘at risk’) and 30% of the upside. In my next life, I want to come back as him 😉
– According to this spreadsheet, I make 32% on my money. Not a shabby return, and pretty much in line with the estimates that I provided above.
The good news is that the project has actually become much more profitable than the early version that I am providing here, but since it’s merely an estimate – as all budgets are – I’m not holding my breath 🙂
I should point out that one of my readers has kindly provided a more sophisticated analysis of the returns that you may wish to substitute in your version of the spreadsheet, if you are going to use it; Jonathan says:
On tab “Proforma”, shouldn’t the annual return equation in cell E34 be something like =(1+E31/E5)^(1/3)-1
It looks like you have =(+E31/E5)^1/3
This drops the return from 32% down to 25%, but I do believe 25% on 2mil over three years comes to 3.9mill (2mill + 1.9mill)
Thanks, Jonathan! This tab of the spreadsheet was actually created by a consultant friend of mine who specializes in this type of thing, so I didn’t really look that closely; still, I will be keen to hear what other readers think?
Real-estate development is a risky BUSINESS, but it can be very lucrative and – provided the market doesn’t turn on you, hence the risk – you can predetermine HOW MUCH money you are likely to make and WHEN you can expect to have it sitting in the bank. All in all, not a bad MM201 activity … one that scales from small projects to large ones.
Speaking of which, my projects happen to be large ones but the methodology to analyze them is pretty much independent of size … only the number of zeros will change 😉
So, whether you are building a single dwelling, a quadraplex, an office, or a 8 to 12 story apartment complex (or two, as I am doing), you will still need to collect a few key numbers – that I ran through with you in last week’s post – from a reputable Realtor and an equally reputable builder:
– The cost to buy the land
– The estimated cost per square foot to build the size /type/quality of building(s) that you are planning to erect
– The expected sale price for finished residential apartments/condos/houses
– The expected rental rates – and current capitalization rates – for any commercial space (e.g. office, retail, warehouse) that you are planning on building
Of course, you need to have a pretty clear idea of what you are building – and, their sizes – before you can really do this properly.
If you have all that, then it’s time to move to the second tab of the spreadsheet [AJC: I recommend that you spend a few minutes double-clicking on each cell to see which ones require you to insert a number, and which ones are formulas that should feel free to use or adapt for your purposes]:
– Your site may be a certain size, but you will need an architect, designer, draftsman, or town-planning consultant to tell you how many buildings / floors you can put on the site … it’s this buildable area that we are most interested in.
– I have allowed $500k for consultants’ costs (e.g. survey, plans, etc, etc.) for my large project, but it’s much better if you can call the various experts that you need and get an idea of their likely charges up front
– At this stage, I’m not building in interest cost … that will come in the next tab
– Most of this tab of the spreadsheet is self-explanatory [AJC: just drop a comment, below, with any questions!] and, completes itself, IF you have researched those numbers that I asked you to get.
Don’t get overly excited about the $7 million ‘paper profit’, as next week we’ll look at how to build in the interest component [AJC: don’t worry, the profits will still remain in ‘nose bleed’ territory IF everything goes according to plan] …