How to Become aProperty Developer

In Indonesia

What comes to your mind?

• Big capital? • Sophisticated work flow?• Fantastic marketing efforts?• Bureaucracy complicated?

Consider this :• Real estate business never dies• Growing business• The demand still higher than supplies; everybody

needs a place to live• If we loss, we still have the properties tough, and

the value still rising• Provide the decent houses• Art. We create, innovate, challenging

Think Big, Start Small, Act Now

• Start from small area, from two till ten houses; tied the market

• Branding ; yourself and your property-based business

• Continuity, make healthy cash-flow

The Parties : Who’s Involved

1. You as Developer

2. Land-owner

3. Marketing

4. Contractor

5. Customer

6. Bank

External Parties

Helicopter View

Preparing1. Location, location, location : Find the bargain-value

land, minimizing the investment and capital; remember, that buying a house is investment for the future

2. Find the good builder, contractor; marketing-agent; build-up good relation with creditor (bank)

3. Market-research ; sounding your project, getting your initial customer

4. Cash flow analysis ; prove that your project is making money; price up for the expenses reallistically

Developing

1. Make your site plan, hired architect and civil engineer

2. Arranging your site-permit from city-council, do some bargain

3. Cultivating the land, build the infrastructure ; water-drain, road-stiffening and plotting

4. Viewing a house : a model, proof

Selling

1 Do some marketing campaign2 Follow up the prospects3 Get some down payment for house

construction (initial payment)

Managing

1 All related site activities must be well-supervision and control

2 Stick to your budget3. Be clever to work on your cash-flow; build by

order, build form customer’s money, pay the builders from the bank

Profit taking

1 Make sure that the finished houses clear from the problems; meet the customer’s need, pass the requirement and specification; zero complaint, then paid all related expenses

2. Count your money, prepare for the next development, roll your money!

TipsFunding from the external parties

• You get the land from relatives and friends, cooperate with them, or you can convinced the land-owner to collaborate with you

• Sell the design, get the 30% payment-in-advance from customer in cash (if customer pays in credits, mortgage loans from bank)

• Use that money for paying contractor’s down-payment (example 15%, you get 15% saving funds), the tips : find the good contractor that can full-financing to build your customer’s house till finished

• If the house finished, the bank will paid the settlement (you get 70% remains, customer already paid 30%)

• Then, paid the contractor by money from bank, it will cost you at 50% from the house-price

• Conclusion, count the capital from your pocket!

How it all works : an Illustration

1. If there is a 120m2 land area, valued at 400k/m2, 48 million IDR in total

2. Plan it for 2 unit houses, 36/60 type of house3. The reasonable price for build the house

(real-estate quality) at 2 mil/m2, then cost (36x2x2mil) resulted 144 million in total

4. Therefore, you need capital for 48mil + 144mil = 192mil IDR

5. If the reasonable price in that area for type 36 is 200 mil Rp, meaning your projective income (2 houses) will be at 400 mil Rp

6. Your profit will be 400 mil – 192 mil = 208 million Rp, sounds great doesn’t it?

7. And wait, the greatest part in here is the option for the financing your small project :

• If all the capital (192million) comes from your pocket, that means your profit around 110% , eh but customers already paid-in-advance for 30% x 400 million = 120 million, so you just invest 72 million! No, no no! But you collaborate with the land owner, so you just invested 72 – 48 = 24 million! So how comes 24 million generated 208 million? This is property-developer cake, lets eat its!