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. 

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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

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On top of that, the total value of 3 pieces of bungalow lots returned to us is valued at RM1,000,000.

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Total value: RM2,986,220

Therefore, the Return On Investment is:

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Acquisition Cost of Land: RM220,000

Total Value Of Property Obtained: RM2,986,220

ROI: 1,257.37%

Annual Return: 91.11%

Compounded Annual Return: 20.80%

Investment Period: 13.8 years