Profiting From Joint Venture
The 0.763-hectare vacant land was first purchased by our investor on 12th July 2005 with a purchase price of RM220,000. In September 2012, we entered into a joint venture with a developer whereby we as the landlord contribute the said land and the developer undertake the construction and development of all houses on the said land. The construction is completed in April 2019. In return for contributing the land, we as the landowner is entitled to 3.5 units of the houses constructed, and on top of that, 3 bungalow lots that have not been built on are also returned to us.
The total value of houses calculated based on the current market value is shown below:
First unit : RM555,360
Second unit: RM556,095
Third unit: RM604,765
Value of the remaining 0.5 unit: RM270,000
On top of that, the total value of 3 pieces of bungalow lots returned to us is valued at RM1,000,000.
Total value: RM2,986,220
Therefore, the Return On Investment is:
Acquisition Cost of Land: RM220,000
Total Value Of Property Obtained: RM2,986,220
Annual Return: 91.11%
Compounded Annual Return: 20.80%
Investment Period: 13.8 years