“Elysium, it’s not ‘uncertain’, that’s why contracts and lawyers are involved!!”

.. correct.

An offer becomes a “binding contract” when accepted by both/all parties i.e. signed.

The contract is “conditional” until all conditions [incl. subject to] are met, or the contract terminates.

When the contract becomes “unconditional” the buyer is…[Read more]

For those who are interested in the New Zealand market..

On Saturday 51 residential lots sold at auction in Wanaka in less than 2.5 hours for $16.5 million [$235,000-$450,000].

I understand several buyers are already in negotiations to on-sell for a comfortable profit.

— Michael

Bill

I am not usually one to bother with debates of this nature, however..

Having read your comments I would consider you nothing more than a pessimist [possibly burned in the past, or not quite as knowledgeable as you suggest].

There is nothing substantial, or substantiated, in your response to this post – specifically your so-called…[Read more]

“The moment one invites too many people one may well need a prospectus and I guess that in the small deals we are talking about, that is to be avoided even if for the cost involved only.”

The Australian Securities and Investments Commission does not require a prospectus if you are raising less than $2 million from 20 investors/partners in any one…[Read more]

If you find a suitable lot and the vendor is not in a hurry to sell, you might consider securing a land option [contract] subject to the council implementing required utilities/infrastructure.

Negotiate a refundable deposit [held with a legal representative] and include a sunset clause whereby the contract terminates and deposit is refunded [+…[Read more]

“Firstly, getting a quorum people to either turn up or have their input phoned in, wasn’t easy! Secondly, nobody was ‘the boss’ – it was a democracy… you’d always get whingeing about it from the one or two members who didn’t vote for it.”

– This is an example of the importance of preparing an operating agreement prior to the formation of a…[Read more]

“I am then free to go off and invest the money as I choose?”

The loan agreement will likely stipulate the investment parameters.

“He gets a guaranteed return with no risk.”

I think you will agree, no investment is ever guaranteed or risk free – within reason.

“This puts the onus on me allot more.”

Which is why an equity based arrangement is…[Read more]

“and they have margin calls so you need to have cash for emergencies, as they will sell your stock on you in the event for the market going down”

The broker will require “immediate payment” from cash reserves if the sale of stock does not cover the margin call.

Margin loans should be left to very experienced traders.

— Michael

“..find a lawyer who has experience in this type of setup. what they should be able to provide you with is a ‘proforma’ contract ie a contract already in use for the same purpose.”

It is not likely a lawyer will release a draft agreement – these documents are generally used to prepare all agreements/contracts.

Below is an outline of terms and…[Read more]

“Scenario 1.”

A loan is not recommended because it will often restrict the investors rate of return – meaning it may be more difficult to reach an agreement.

Furthermore, there is limited security in a loan arrangement for a foreign investor, versus an equity-based arrangement i.e. Unit Trust.

—

“Scenario 2.”

“for the capital invested, grant…[Read more]

“What sort of property deals lend itself to this sort of arrangement (I was thinking along the lines of a buy, reno, sell). What else is there?”

This depends on the location, available funds/finance, expected return on investment, supply and demand, your experience.

“buy, reno, sell” may not be the most profitable strategy at this time, other…[Read more]

“I have read allot of books about real estate investment but all these books fail to give good advice on risk management.”

The reason risk management and exit strategies are not extensively covered is they can vary considerably subject to the type of investment, stage of investment, financial resources, location and many other variables.

The…[Read more]

“..who knows of wealthy private individuals wanting to lend others money.”

Before approaching “wealthy private individuals” you must have the experience and knowledge to present a profitable and risk adverse proposal.

“There is much to learn”

If you are starting out, I would recommend gaining some experience i.e. working for people in the…[Read more]

“How can house prices keep rising without incomes in the area rising as well?.. The only answer I can come up with is that prices can’t possibly go up so far ahead of rents sustainably.”

In my experience – which is an investment/development role in primarily waterfront/coastal locations, the answer comes down to “supply and demand” and the…[Read more]

“..how does one tell if a given area/suburb is over inflated”

There is a variety of market data available to compare today’s trends with historic statistics.

However, “over inflated” is in the eyes of the beholder – to some people current valuations are excessive, where to others they are a bargain.

Real estate is generally a resilient…[Read more]

SFH’s = single family homes

Although somewhat higher priced than most regions, Queenstown and Wanaka are recommended as the two most profitable locations – land/SFH’s when available are valued significantly higher than other regions in New Zealand, therefore an apartment may be preferential.

Alternatively, in terms of SFH’s, Dunedin and Nelson are locations worth…[Read more]

There is a generally an up-front deposit [10-15% of the purchase price] which is staged throughout the sales and construction phases.

The following example is based on a 10 percent staged deposit:

– $5,000-10,000 down payment on signing the Purchase Agreement.

– a second installment increasing the total deposit paid to 5 percent of the purchase…[Read more]

Queenstown is a unique location where demand is expected to exceed supply for some time – in terms of high-density land and the high-end residential market.

Unfortunately, as is the case in Auckland, there has been an ubundance of sub-standard development in Queenstown in the past couple of years which is likely to impact the lower end of the…[Read more]

This article is likely to be a catalyst for investment opportunities in the Auckland region.

In terms of the housing sector, this adjustment was expected. The same could be said about the abundance of low-cost “show-box units” developed in Auckland in recent years.

However, I do not feel this trend will have a severe impact on apartment…[Read more]