Hi all,
A fairly specific case this one – although all suggestions welcome. I’ve just (3 weeks now) put a development on the market – my first – 9 villas off the plan in a NSW country town, pop circa 8000
Have done it all the right way: perfect location (300m to main St), big (143 – 185m2), priced right ($196 – $232k) respected local builder, choice of inclusions, colors, options, etc, etc.
The town is growing, albeit slowly, with the majority being retirees.Have open listed with all local agents (for the right reasons) and all report the same thing: a large number of interested people, lots of info packs requested, etc, but as yet no starters. The consensous seems to be off the plan (a new concept there..) combined with conservative country people means they’re all waiting ’til either a) the building is finished [confused2] or b) other people to start buying them [baaa] My problem is I need some pre sales to confirm the finance. No starters = No start.
So, my question/request is this: Apart from allowing small deposits or a bond (done it),
quality artist impression, detailed plans and oodles of printed info (done it)talking to them one on one re any questions (about to do it), guaranteeing the villas will value up (match or exceed ind. val on completion – thinking of doing it), does anyone have any suggestions as to what else I could do to reassure (mainly older) people
re buying off the plan? Or is there anyone who has bought of the plan (for non investment reasons) who can tell me what made them happy to proceed?Anyone?
theloanarranger
theloanarranger
maybe get an ‘on completion’ valuation and discount it by 10% or so for the first x sales? The question most buyers would be asking is ‘why should I buy now as opposed to just waiting to see what the whole finished project looks like?’. Competing on price though is not always the answer… you need to look at the unique attributes of the development and hopefully you are developing a product that people will realy want and be willing to pay a premium for. You need to isolate what those features are.
Try offering it to the agents to see if they want to buy one for themselves at a discount too; take the commission off the price.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
One method I saw used was to do a mockup of one of the units fully furnished, kitchen complete and just a matter of walking through and chosing colours etc.
From the outside it looked like a big shed but inside it was one of the units and they had a big colour photo of what your proposd view was to look like.
Alot better selling tool than plans that most people can’t read(obviously more expensive, but you could reuse the materials latter who knows).
[cap]hope that helps
GQ
Thanks AusProp and GQ,
Re the mock up – good call but can think of nowhere to stage it, not to mention the dramas n $$$ of putting together a real ‘exhibit.’
So am now considering getting a virtual mock up done so people can do a walk thru etc – may well be a good step as I think yor’re right – people have trouble visualizing the end product from the plans and artist impression. Many thankstheloanarranger
Population 8000, have you considered listing with out of town agents?
Targeting a broader market of retirees who are looking for a life style change may help.Regards
Steven
Mortgage Broker[email protected]
http://www.mobilemortgagemarket.com.au
Ph:0402483216
Ph:1800 820 500
VICTORIAPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
Seems to be a common thing with smaller towns, and even larger ones such as in Tasmania. It’s hard doing something different to the norm. I think marketing outside the area is a good idea though.
Good luck with it.
Another idea might be to approach some investment groups who market to their clients.
I imagine these would be easily rented and have great depreciation potential.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Todays Hot Rate
***3 year fixed – 6.49%***Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
yes the Investors Club for example is one group that can sell almost anything; in my experience their selling fees / commissions tend to be a bit high though. Worth a call though…. maybe bite the bullet on a few and keep the rest until completion.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
Why not list the property with an out-of-town agent in Sydney or Melbourne where people are willing to fork out for off-the-plan.
If the numbers work I’m sure you’ll find interest.
Cheers,
Aceyducey
In theory, there is no difference between theory and practice. But, in practice, there is.– Jan L.A. van de Snepscheut
why not build 1 unit to completion and use it as the “display Unit” people will probably be mor ecomfortable parting with the cash if they can see somthing tangiable.
Sorry folks, been away from the computer of late – have been a tad pre-occupied with the project.
Thanks one and all for the suggestions – have listed the development with out of town agents, who have clients/customers seeking investment properties. Have estimated returns in the region of 6.5% p/a or thereabouts, (rent + depreciation) which whilst not spectacular is probably better than a lot of “investment” property nowadays. There is a definite shortage of comparable rental properties in the town, so they wouldn’t be hard to let if that remains the case when they’re completed. The forseeable capital growth may not be spectacular (being a smaller town), but could be a very good fit re a mortgage reduction strategy (no, not the Hart’s method, the legal way..) for people looking for a lower price range property. Time will tell..Am heading down there over the next week to talk face to face with a number of interested parties – having considered the (reported) number of people wanting info vs the lack of deposits I believe the agents are somewhat lacking in their ability to impart full details, despite being supplied with pretty comprehensive property marketing packs. Plus dealing direct with the principle rather than an agent might prove more reassuring to people, and I can see how strong their interest really is, and work out an agreeable solution, ie < 5% deposits, modifications, etc, if that’s what’s causing the hesitancy.
I learnt a long time ago that it’s very easy to say no to something I’m not 100% certain about – I’m guessing older people (most of the interest is from retirees, as expected) can be more cautious than most. As yet I’m uncertain whether to talk to each individually, or hold a meeting and invite all and sundry to attend. I’m thinking that by standing up in front of a roomful of people that it may go some way towards reassuring people I’m telling it straight, and cover all questions from all comers in a time effective manner. If I do get a roomful of people it’ll show me the demand is there, (good to know these things for sure..)as well as creating a sense of urgency/competion from interested people. Only 9 villas, all different, 1st in best dressed, etc. What do you think people? Worth the effort?
Will have to end here (the coalface beckons..) but if the interest/replies are there I’ll keep this thread going and report back in a week or so on how things are progressing. And at the risk of being condemned/accused of a blatent sales plug, if anyone out there would like details, specifics, etc please send just me a PM.
Thanks again to all for their input.
Cheers,
theloanarranger
TLA,
I like the idea of the group presentation. It wins on several counts:
1. Like you said, makes you a “real person” who’s not afraid to tout their wares to a group.
2. Elderly people would probably be very comfortable in a group forum like this and not singled out for special “treatment’.
3. You might even benefit from some group reinforcement of the concept. If one or two start to nod along then you might get some groundswell.Anyway, what ya got to loose?
Cheers,
Michael.Hasn’t the market (in most areas) changed to a buyers market? I see a lot of sites DA approved up for sale now-a-days. Duplexes etc up my way are languishing on the market for what seems for ever with multiple agents “for sale” signs out the front which are soon followed with “for lease” signs.
Sorry to rain on your parade but maybe it’s your lucky day if this project doesn’t get off the ground! Think very carefully about it.Hi TLA
Why not go with a financier that does not require pre-sales? There are a few of them around. Leaves teh sales until completion, and when coupled up with time growth and emotional appeal of a completed product, you may gross more from your project anyway.
In small towns often proposed developments never get off the ground or start much later than expected making locals reluctant to committ to buying off the plan.
My suggestion is to get a couple of friendly parties (friends , family but not with the same surname) to buy based on you agreeing in a side contract to buy it back on or before settlement giving them a samll profit. They can protect themselves by putting in some out clauses you know will be tripped. This way you can post a couple of sold stickers and build up some urgency in the minds of buyers and agents. Actually startng the project will generally help as well as it aleviates scepticism that the project wont be built.
As an aside also make sure your fixed price buyilding contract is locked in a a level that makes you sufficient profit as a lot of developers have been caught out by rapidly rising building costs making previouls profitable presales marginal at best.
[builder]
Michael
Two suggestions involve seeking seeding finance.
Where else can you get 15% return on an investment? Offer 100 x [y] contracts in relation to your project with a quarenteed return of 15%. Three of these should enable you to seek the finance with a mortgage provider.
Offer a villa at cost price to investors with the proviso that they invest $150K seed capital. I have just negotiated such a deal involving 7 units. Three of these units will involve no capital gain and 4 will. I am hopeful of achieving a 6.9% interest loan for 750k to complete the project. It is noted that the contracts for achieving this seed capital were somewhat difficult to achieve. In hindsight, i would have preferred a straight offer of 15% return on the seed capital provided.
The other suggestion is to complete the project in stages.
Best of luck
Russell.
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