I recently had the opportunity to sit down with Mattias Samuelsson (T) a 29 year old real estate agent in one of the top performing Ray White offices in the country.
T is basically real estate royalty and has property investing in his blood.
After this interview you will see why T is well on his way to creating a fortune, while living his life on his own terms.
Property Development Case Study
Why did you choose a career in realestate?
I’ve grown up surrounded by real estate…literally.
My grandfather opened his first real estate agency in 1972 in a small mining town. Shortly after he realised there was a lot more money to be made in property investment and development.
This is how my grandparents went from struggling to support 11 children to becoming millionaires and retiring in comfort.
I would sit at the dinner table each night listening to them discuss their portfolios, as well as pros & cons of potential investments. Although I found this boring at the time, a lot of it has stayed with me and I’ve now developed an interest in property.
Most kids dream of becoming doctors, firemen and pilots.….I just wanted to wear a nice suit and sell waterfront mansions.
What are the 3 most important lessons you have learnt during your time in the realestate market?
- Do your research. It is easy to buy and sell property, but if you want to buy cheap, sell high and actually make money, then you need to know everything about the property, the market and the agents you are dealing with… which leads me to my next point.
- Never select an agent based on their commission. I have seen poor agents undersell homes by up to $100,000, not intentionally of course but simply because they are poor negotiators. If an agent can’t negotiate their own commission why would you want them negotiating on your most valuable asset.
- You need financial capital to get anywhere in real estate so start saving.
What are some tips people can use to increase the re-sale value of their home?
Presentation is definitely an underrated aspect of selling a home. It can be the difference in achieving a value 10% above or below market value.
The most important piece of advice I can give is to de-clutter. Get rid of everything that is not necessary, small and large, to give the house a clean and spacious appearance. I tell my clients to imagine their house as a display home and decorate accordingly.
In order to achieve an above market selling price, buyers need to be able to picture themselves living in this home and the illusion can be ruined if the home looks like it’s being lived-in.
What are the most common mistakes you see people making when marketing and selling their homes?
The number 1 mistake vendors make is being overambitious with their selling price. When the property first hits the market it has fantastic selling prospects. It’s new, it’s fresh and people that have been waiting months for a property like yours are ready to make a good offer straight away.
Most vendors see the most traffic and best offers come through in the first week, often these initial offers are the best you will receive. 3 months down the track you will be happy to have 1 buyer inspection per week.
A good agent will know how to manage your expectations. I personally get very concerned if a property has not sold within the first 4 weeks. There was one instance when we listed a waterfront property and within the first week we had an offer at $2.3million. Despite our advice on the contrary the owner rejected the offer feeling that he should get $2.4million. The property sold 7 months later with another agent for $1.7million. That vendor learned a very valuable lesson that day… a $600,000 lesson.
When did you do your first development?
When I was 18 my brother, who was already a successful property developer, said that he had a potential development property for me. I had just started working in real estate and had very little practical experience and even less financial capital. Fortunately my parents were able to guarantee my loan and I was able to buy my first property.
In hindsight I should have waited until I knew more about what was involved however I still managed to come out on top which was as much luck as anything else.
What was the development?
The development was a small miner’s cottage on a 500m2 corner block.
The plan was to demolish the existing residence and erect 2 project townhouses. My projections were promising, $420,000 for the house, $390,000 construction costs then selling each townhouse for $480,000. There was potential to make $150,000 which at 18 was more money than I had dreamed of having in my account.
Unfortunately I based my figures my ideal scenario and not the worst case scenario.
I didn’t keep a close eye on the expenses and in addition another developer started a large project only 100m down the road.
The costs ended up blowing out and my selling prices were not as high as predicted, however I still managed to make as much money as a lot of people make in a year which I put aside in 2006 for my next development and have managed not to touch it until now.
What did you learn from the development?
I learned that property development is a lot easier in theory than in practice. It is hard work and very easy to miscalculate costs and returns. Always work out your projected costs for the worst case scenario and if the project is still viable then go for it.
There is always an element of gambling involved but the more research you do the better your odds.
I also learned that in order to get ahead you often need to be proactive.
As a real estate agent I probably shouldn’t say this but if you see a property that you want for development or investment, don’t wait for it to appear for sale. At this point you will have to compete with the rest of the market. Knock on the door and make an offer. The worst thing that happens is they say no.
What does your next project look like?
I realised after the first project that if you want to be successful in property development you have to consider at it as a full time job.
Developing can be very restrictive of your time and finances and I had a lot of personal goals that I wanted to achieve before making the commitment to pursue this professionally.
After years of travelling the world I recently moved back to Australia and made the decision to go pro.
I immediately began looking and after 2 months purchased my next development property. It is a 3 bedroom brick home on a 909m block. The plan is to renovate the existing home, build 2 townhouses on the rear of the block and then subdivide the block and sell all 3 properties for a profit.
My basic projections are a lot more conservative than my last development but are still very promising with an estimated net profit of $375,000.
Anything else you would like to add?
Yes. Life is too short to spend working 9-5 for the next 40 or 50 years. Take active steps to build your wealth now so you can enjoy your life later on.
Are you looking to develop an investment strategy but don’t know where to start?…then book one of our obligation FREE Strategy Sessions here and learn how you may be able to retire through property in 10 years or less.
Warning: Pumped On Property are not investment advisers. This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. All readers should seek independent and qualified investment advice before purchasing a property.