Forum Replies Created
Can you subdivide the land into more land? Even if you cant split one into two, if the three are together (not mentioned previously, and I assume they are not), you may be able to split three into four or five.
I would build the biggest house (2 story, so you still get a backyard) on the land, one by one, rent them out, and then see if you can afford to build the next one.
Of course, you could simply dissolve yourself of this massive problem of yours by giving all of your property to Mr Wrappack[^][^]
So, pisces, I hear and sympathise with your feelings.
But I think that there are only two questions that you ever have to answer (even if only to yourself)
i) Am I prepared to donate my organs?
ii) If I personally needed an organ in order to live, and one was available, would I want it?All organ doners seem to say a big yes to both. Seems pretty fair, what goes around comes around.
I fully understand and support people who say no to both (but we all know that when the choice becomes death/blindness or receive an organ, they might change their mind!)
And a hell of a lot of people say no to the first, and yes to the second. Methinksthatsjustnotfairnorlogical
Many thanks for your comments pisces.
In tweaking the formulae a bit, how does the following action plan sound?
Tie up all 4 properties (owner has three, and an option on a fourth) with, say a 12 month option. BTW, what is the going rate % wise on an option. ie if the blocks are going for 2 mill cash, how much down and what strike price would be reasonable? (assuming 12 month option)
Put da through council.
If council passes da- then land should conceivebly be worth ?2.8Mill. Then finance will not be a problem, and I could continue as before -ie sell a couple of blocks, retire some debt, then develop a few at a time, or just sell the whole lot.
If council fails da- then go to court (under sepp5), or try a different da?
BTW, just found out from a third party (unrelated) that a unit dev. was knocked back by council, but I plan on buying the block next door and doing townhouses. Should the previously knocked back da concern me?
Have set up a meeting on tuesday with a lady who should be able to help me plan the potential for development ie lottage, roads, ball park costs, etc.
With regards to the negotiating techniques you have outlined, currently I am only dropping various hints at what I would need, and quietly gathering info, while I do my homework on what is and is not possible with the blocks in question.
I have considered the dual occ idea. The ideal block for me would be a crappy house on a v. large block that could be subdivided into 2 blocks, each large enough for a dual occ. Must admit, I have been too busy with my homework on this big deal to be trawling through multiple REA and spending all my time on these. Still, if something comes along at the right price, I would certainly do it, as the risks involved would be minimal compared to what I am contemplating.
Just a quick note to say that I read in the SMH today that about fifteen thousand people have signed up as organ doners recently[^][:X][^]. Strangely, they attributed this increase as a result of the David Hookes tragedy, and not directly to my personal postings on this site
][]Couple of answers- show me the money- unfortunately, the owners want a contract, not an option, or they will let the properties rot till they get their price.
Pieces (no offence taken)- but I have no experience in developing. However, I have an intellegent brain, a willingness to learn, and an old man who can hopefully steer me away from trouble.
I have ditched the prospectus idea, and will form a company, and throw in some cash to get the ball rolling.
I am currently leaning towards melbears idea. If I tie up the deal, and get a da through for subdivision, my options instantly expand. I can sell a couple of blocks (retiring some debt), do a JV with a builder or two, or try to do the whole lot myself (but only with a very successful raising of funds by selling company shares). As a bad movie once said, If you build it they will come. If I come up with a good deal, I should profit handsomely, if not, then I wont!
[^]Absolute classics![^]
I also thought on a similar level to Kay. On ricks tape set he says that he always tries to get access to the house (under the guise of interior decorating/maintenance etc)prior to settlement, so that buyers are ready to go. He also says that his time limit is a couple of weeks, tops.
As for manofactions comments regarding advertising locally in the papers, yes this could be true. However, if I was selling houses, and had a web site up and running, and could easily add a house on the web site within a day of taking the digital snaps, they would be on their ASAP.
Thus, I would think that maybe i)they are old stock, and the web page is obselete. or ii) these houses are not moving at a fast pace. iii) something else may be happening which I cannot think of
Finally talked to the old fella about it.
He suggested – form a company, then add some cash to it.
Forget about a public offer- simply too much time, effort, money, possibly no end result.
Think about taking an investor or two along at initial stages, their input could fund design and development fees etc.
Bettter in a way to have a ‘private’ offering, and getting a few smaller investors (whom may also be involved in the process), as opposed to one large one- always the possibility of being leveraged out
Fairly cheap (change from a grand), quick (5 minutes after I pick a name) and easy to form the company. Also mentioned (without me even asking) one of his clients who may be interested. Apparently she is into multiple property syndicates and is continually asking him how she can make more money! Also, one can approach others one knows and ask if they are interested in investing. Also mentioned that the line between public offering (ie needing ASIC approved prospectus) and private offering in a company is relatively blurred.
My thoughts are now to form a company, add some cash, make unconditional offer with delayed settlement, some % of VF, then try to ram through council a SEPP5 DA yesterday.
Any further comments/ suggestions?
Well done dave [^][^][^]. I was hoping it was going to go for much longer!
Well, it looks like in mel and jaktar are in the opposing corners of the HK camp.
Interestingly, his sister (AKA bridgecorp) was basically running HKs system after asic went after HK. What was even more interesting was that it was his sister that voted to liquidate! Imagine what sort of dealings that you would have to be put through in order to vote to liquidate your own flesh and blood.
Glad to hear you made a quid mel, but got a couple of q’s for you
Firstly, how can visa (or amex/whatever), still take your payment. I would personally fax and email, cancel the cards, etc, to set the paper trail in motion, then complain to the banking ombudman or whoever.
Secondly, how did you make such $$$ in minimal years? My understanding (which is, admittedly, very limited to newspapers and the bulletin) is that HKs scheme was to buy multiple props off the plan using deposit bonds. This is the limit to my knowledge of his system (excepting, of course, the other parts I want no part of!)
Thirdly, and most importantly, could you explain “how to structure our finances”, and “how to sell each deal to the bank manager”? Were these the regular big four? Or something a bit more colourful?
Hopefully, you will get some cash back, but unfortunately, in these things, there is a certain order that things get paid.
i)taxman
ii)liquidators
iii)secured creditors
iv)everybody else
Realistically, I dont think that whether the vote was for termination or continuation, the chances of recovering money AND having it handed back to course owners would have to be minimalAnd jacktar, I can understand your hatred of the man and the scheme that you feel ripped you off, but it is always wise to “play the ball and not the woman”, especially our heavy posters who have large knowledge
Mel, thanks for your input. Re ASIC, they have a ‘minimalist’ approach to small property syndicates. It sounded like what you were saying, just what I was after- till I read the fine print. There is a maximum of 15 investors, and each must have at least 5% of the funds invested. In trying to raise a couple of mill, that makes their investment in the 100-200k range, and I dont know anyone that has this sort of cash lying around to invest in an (unproven first time) developer.
Regarding the other options, they are ones which I will be seriously considering. Problem will be if the DA isnt approved- then would be up the creek with no paddle.
As for a JV with a developer- I suppose its the loss of control thing. If I could raise the cash (or debt), could get the thing done, and congratulate (or commiserate) myself. Still, as they say, everyman has his price[^]. (Bit sexist I know mel, but do tell, I assume every (property investing) woman also have her price?)
Just had a brainwave (happens every year or so). I could investigate how to have a NON- public offer- ie friends, relies (yes, yes, even I have said never to invest with them) and perhaps a couple of the old fella’s clients. Even if i could raise 1-200k it would make things very doable.
Michael (and others), any thoughts on setting up a company, raising 1-200k via a non-public offer. I think that there would be many, many pitfalls to carefully tread through. Any comments.
“end of one over, start of next, both have hit a 6.”- Come on mel, even my mother could guess that! LOL
” Is it the very start of the innings?” Sure is mel, certainly is.
I too have wasted 20 minutes of my formerly pleasurable life reading this inane thread[8][
][][:o)][][}][:0]. I will soon reveal to to you the answer[^][^][^][^][^][^][^][^][^][^][^][^][^][^]-‘THE MAN OPENS THE DOOR AND REALISES THEN HE IS GOING TO DIE’
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Answer- He is on an aeroplane.
Okay, now aussierougue can ‘fess up that all of that crap about being in a house and a wardrobe was a complete and total fabrication (somewhat similar to “I never had sexual relations with that woman”)
No?
Okay, Ill have another guess.
He sees his wife (and just bonked his mistress), realises that he will be killed, if not literally, then certainly sexually and financially!
Well done, congrats on all of the hard work (hopefully with some fun and learning), keep up the good work and look forward to conversations.
Thanks for your replies. It does seem as though I may be labouring under a misapprehension!
The opportunity is presenting itself is as follows. 3000m in a line, opposite a shopping centre, next door to a medical centre, and townhouses and units popping up everywhere around. Asking price 1.3 mill. Couple of crappy houses (minimal rent, eyesore, etc) standing on the blocks
A multiunit SEPP5 plan has been drawn up (but I havent seen it yet), and there is an option on 1000m next door at about 450K.
Getting all 4 properties would give me 4000m, which is over the 3500 required for a cluster development, ie townhouses.
Delayed settlement may be possible.
In a delayed settlement, if the DA is approved (dont see any reason why not), then equity would have magically appeared, making things much easier.
Probable numbers- value 1.8 mill, owe 1.0. ie some equity, but not a huge amount
If I exclude trying to raise public funding, and there was say 16 units, how many would have to be sold off the plan in order to raise finance? I am led to believe that about 40-60% would have to be sold. I would try to sell them myself at investors clubs, etc, before I got stitched up with a REA
Another idea of mine is to scrap the units (esp courtesy of the HK saga soon to unravel), and subdivide into townhouses, then just sewer, power, and road the place, landscape it, then sell the lots off to local builders. This seems to be my preferred option at the moment.
A development across the road from me was done with solid financial backing, as none of the houses was sold prior to lock up stage or a month or two later. This to me sounded like pure brilliance. Have the cash (or the bank) so well funded, as to then sell to owner occupiers. Even after lockup stage of over half the units, they hadnt priced any, and had over two fullscap pages of phone numbers to ring- Who would need an agent?
One last question (last labour under the misapprehension)- my dad is an accountant, some of his clients regularly are into syndicates. If (and the discussion has not been really discussed (its the old story isnt it? gotta do the DD, but where to start? Where to learn? thats why you guys are so great[^][^][^] ’cause I can iron out my wrinkly arguments so that my direction is better known!)) he were to raise the possibility of a syndicate in 6-12 months with some clients and had some idea of numbers and figures, would it be then be worthwhile just getting an ASIC registered prospectus? That way, I would have minimal costs, and would be legally able to raise finance. Would I need a fin service licence for this? Or could the company act under one? ie seperate account only accessible by the licence holder?
Many thanks once again.
KateA, if you were intending to set up a split loan and PPOR loan (or already have) and use your theory, I think that you would be on very shaky ground. My vote goes with Mel, if the ATO loses, they will get parliment to bring in a law that says that interest on interest is not deductible. Probably wouldnt be retrospective though.
In your case, lets crunch some numbers and see if it is worth worrying about. If you owe 15K on PPOR, interest is about 7%=1050dollars a year. At top marginal rate if you could shift this to the IP, you might end up saving 500 bucks a year. If you get audited, and your auditor sends you a bill, is that really going to do you damage? However, if you did it over a few years on a new 500k loan, well you could be heading for the bankruptcy court.
Tried to find trust magic on the abovementioned site- could not find it. Any have the exact web address?
Many thanks for all of your replies. I sincerely appreciate all of your replies, both + and -ve.
Michael, I was not discounting your views, but wanted to ask whether your approx fee of 100k would still apply to a relatively small scale venture.
Obviously, this scale of thing is in a difficult situation. It is too large to do by myself, and is too small to be welcomed with open arms by the big end of town.
In between, my concept is that if I was able to have an ASIC registered prospectus, then I could then attempt to raise funds from there. I think that there are many people around who wish to invest in property by developing the units/townhouses, as opposed to buying the units/townhouses. ie be the developer as opposed to buy a development
By initially raising funds, this would allow significantly less borrowings and LVRs from banks, and give much more room for manouver (ie delays, contingencies,etc). Then, selling after completion to owner occupiers , a higher price would be achieved (emotional purchases, particularly if I finance them 10 or 15%VF) than by initially selling cheap off the plan to investors (who wish to pay cheap prices) in order to raise the finance to build the units.
This point alone would have to significantly enhance profits. Lets assume a flat market, and say a 400k unit/TH (fair price). Off the plan investors (with a two year horizon) may only want to pay say 380, but on completion, owner occupiers would be more likely to be willing to pay a higher (say 410-420k) price if they are emotionally (rather than just fiscally) attached to their PPOR. THus, simply by selling on completion, an extra 40k might be gained. ie 10%. If one is working on about a 20% expected return (as I believe the case is), then an extra 10% will be closer to 30%, with less chance of drowing in debt along the way. If needed, we could always sell one or two off the plan.
Im with mel on this one. Make an offer, your price, your terms, your settlement. What does a contract mean? Usually what the REA has talked the vendor into!
Why not get a contract, contact the owner and use the jenman phrase.-I would like to buy your house, how much would you like? If they crap on about how it is going to tender in 6.12 weeks time on the full moon, just say, “well thats a shame, because there are two other houses which I am very interested in buying, and I will not wait 7 weeks (or whatever) to see if I am the winner. Give them a price on an in-office exchange ie .25% deposit with a 5 day cooling off period to do your building and pest. Lord knows you will need it with a (possible) heritage listed.
If the agent is intelligent, set up a meeting with them. Remember, he gets paid by your back pocket, and if you come up with a reason (cash, now, my terms), he would be a git to ignore youMichael, I talked last week to an acquantaince of an acquantaince in the finance and RE field. He said that I would be best to start with a company (easy to set up and easy to get extra funds down the track (as opposed to a trust)), and an ASIC approved prospectus. Cost of prospectus 3-5 grand, and about 6+ months, and all up I should get change from 10K (forgetting about marketing expenses). What were you basing 100k on ?
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