Has anyone here had any experience with bulk purchasing [as in ten properties or more in the one hit]. I was curious as to
A] what sort of discount would a company developing a new estate give for such a purchase
B] what sort of finance you would need to arrange and
C] how one would go about arranging such a dealI figured with that sort of purchase thier would be ample room to negotiate a heavily reduced price as well as a better than average loan that could result in a large number of brand new CF+ IP's at once.
This is WAY above my level but it has got me curious all the same.
Any thoughts or experience out their?
hi MM
Most developers would jump all over you if you were to buy "in Bulk".
Do your research on the project first before approaching them so they don't give you "Rack Rates" and then you be assured that thediscounted bulk is in fact just that. They have creative ways of making you think you are getting a genuine discount. You will have a lot more power in negotiating the length terms also. Cant help you with finance as I don't know your circumstance but suffice to day that the developer will need proof of "in-principal finance" to see that you are a genuine large parcel buyer/s.
cheersdepends on the developer. they have targets they set and will most the time meet them.. for instance..
they figure out that the unit will cost them 80k each, and can sell for 220k each..
if u rock up and offer 120k each and buy 75% of them.. then look at all the profit the developr just lost..
some will say " yeah no worries ill give u 15% off". others will say " nah but u can have first dibs on which unit u want".
i can see where your coming from, but in the end.. look at the developers side too. if they are struggling and u can see it, offer sumthing low and in bulk and reap the rewards..
It's a great way to acquire IP at a discount.
I have had terrific experiences.
We form small JV syndicates to enhance our buying power.
Developers become keen when they have remaining stock and want to fsell off and move on.
Be aware that a discounted price will establish a new valuation precedent.
If u buy $300k IP for say, $250k (cause u bought 8 between u), make sure that the 'discount' is by way of a rebate at settlement not a reduced contract price.
In other words have the sales contract $300K with refund 50K
This way the PUBLIC recorded transaction is $300K and this is critical for valuations now and future.
It depends to a great extent on the strength of the market and the product being developed. I'm involved in a 20 x 650 sq.m. lot subdivision on the northern outskirts of Brisbane. DA is about a month away and we already have a one line buyer for all 20 blocks to do house and land packages. The sale price is 10% above valuation. This is because land in this price bracket is in great demand and the buyer was prepared to pay over the odds to secure the parcel. It will be about 11 months before the 20 lots are constructed and seperate titles issued. By then the market is expected to have absorbed the 10% premium and maybe more. A case of a strong market, a product in demand and no discount for bulk buying.
I am also involved in a 22 unit project close to the CBD in Brisbane and opposite a hospital. DA is about 3 months away and we already have expressions of interest for 40% of the project. Prices are adjusted up as the market rises during DA. No discounts there for bulk buying either. Same reason.
Bob, there aremarketing groups who still cold call and seminar / sell 'wealth creation'.
We all know that they sell for much more than market value.
I know of 1 company who marks up the product up to 75K and this is 4 a SEQ H&L package.
Of course they need to sell to interstate buyers who are less aware of values.
Your products appeal to these marketers, 20 H & L package (without a valuation precedent) is worth 10% premiumin their eyes.
Had u sold 6 blocks at real market value (therefore creating a value precedent) they would not be that interested.
If you developed and held long enough (without sales), u might accept an offer at MV – 10 to 15%
Just my obsevations and experiences.
hschmid wrote:It's a great way to acquire IP at a discount.I have had terrific experiences.
We form small JV syndicates to enhance our buying power.
Developers become keen when they have remaining stock and want to fsell off and move on.
Be aware that a discounted price will establish a new valuation precedent.
If u buy $300k IP for say, $250k (cause u bought 8 between u), make sure that the 'discount' is by way of a rebate at settlement not a reduced contract price.
In other words have the sales contract $300K with refund 50K
This way the PUBLIC recorded transaction is $300K and this is critical for valuations now and future.
If you don't disclose the "rebate" in the loan contract, you are arguably committing fraud in that you will be knowingly representing to the lender that the purchase price is X when, in fact, it is X less whatever you pocket.
Also, the rebating approach is how developers rip-off investors. They sell the first bunch of properties to associated parties (directors, contractors etc) with an "off contract" rebate, establishing a padded series of comparison sales. When the genuine buyers turn up and get their prospective purchase valued, unless the valuer is savvy to what's going on, they will enter into a transaction under false pretences and, in all likelihood, do their dough.
There is no reference to loan applications in my coments. Yes I agree, tell your lender about the rebate.
For lending purposes, they will use the discounted price as the benchmark.
(purchase price or valuation whichever is the lower)
You will also notice that my scenario was the backend of a development not the frontend.
You maybe right about developers antics, but any investor who buys off the plan would be unhappy with latter sales being discounted through a bulk sale and having these sales prices NOW creating a new precedent.
Hi MM
This is a great discussion.
I have to tell you all that I an a registered real estate sales person in Queensland. The laws in this state where changed in 2000 and it is not possible for agaents or developers to sell property at inflated prices here. Independant valuations determine the price of the property, not a money hungry seller.I also talk to prople about wealth creation through property investment, however I don't sell in bulk.
I have recently come in contact with a company here in Brisbane that does approach developers on behave of it's clients in order to bulk pruchase. http://www.jdlstrategies.com.au/
Maybe they can help you.
I hope you find this information useful and please get professional advice.
pjk1966 wrote:The laws in this state where changed in 2000 and it is not possible for agaents or developers to sell property at inflated prices here. Independant valuations determine the price of the property, not a money hungry seller.
Far be it from me to suggest that the good people in the RE industry in Queensland aren't all models of honesty, prudence and charity but:
*if there was a bounty on dodgy property spruikers in QLD, a hunter could still have made a good living post-2000.
*valuations are product of people and data, both of which can be bought, manipulated or mistaken.A little more difficult since 2000; maybe.
Impossible? Not so much.
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