welcome to my world

[grossreal]

Hi all
I will leave les or geoff to place this tread as I'm not sure were to put it.
I am going to keep this thread a live for some time.
It is to explain how you take a soup,( a problem site) make it into your project and turn it into a profit.

lots of people have asked If I would explain what and how I do business well this post will give you the ins and outs of how and what I do and this will be real site and real figures and for those budding property developers you may wish to learn. Post any question you wish the site is secured and no you can't buy into it and it will become self evident as the project evolves.
You will have to follow with me and may have to read a couple of times to understand,
This is not from any book this is my system and can work anywhere.

Let’s start
First you need a soup
This one was a broth
a site with a contract on it for 8 mil in 2003(remember 2003 as it is very important when looking at site as most that aren’t built now are in trouble)
Mr A takes an option on the site and throws 1.3 mil in to the site and takes to the land and environment court and wins (or he thinks he does)
The correction happens and the banks close in the reins and know he has problems that’s when people like me get involved (we are not sharks but are looking for soups).
Mr A goes to lots of lenders to no avail 3 months later
I offer to buy the site for 8.5 mil Mr A refuses.

The owners of the site have a bust up and then one of my real estate people ask do I want to have ago again.
This time I low low ball 6.7 mil(remember this site has a valuation of 10 mil)
This is by know 8 months this site has been kicked around by everyone and a couple of dogs.
The owners won’t accept so I go to town on the owners individually until one cracks at 6.840mil now we have a deal.
So we set up and new company and trust structure.
We get the valuer from a lenders panel to value the site as a gross realisation lend of 80% across the board on a 43 mil resale value.
And the same valuer to give me as raw site value.

Now for the pen work.
First the new company buys the two sites as individual sites 6,84 mil 80% 5.472 mil and I put up 1.368 mil short term money 2 months
then combine’s the site straight away and the da is carried by the land owners (so got the da for free) and refinance at the new value that I have already got in advance 10mil valuation 80% lend 8 mil I repay the 5.472 part (it’s the same lender so they give you 2.528 mil) I repay the 1.368 leaves 1.16 mil take out the short term interest 68k and you have 1.3 mil in the kitty to start the development.
I will explain the next chapter in this project.

I Am doing it in word and pasteing to read a bit easier and this is about 8 months of work at this stage

[wish-ga]

can you please space the paragraphs. It is very difficult to read. And with a long post increased readability will increase thread participation.

To gr and other posters please hit enter TWICE when you want to start a new paragraph. (gr - it may have lost the extra enters when bringing it over from Word)

Just realised the post took you 8 months - feel bad now :)

[WBG Redcliffe]

looking forward to the next chapter

wbg

[skater]

I have to say this, but I am lost. I really don't understand. You said that it was one site at the beginning, then half way through it becomes 2 sites. Did I miss something?

[grossreal]

hi skater.
It is currently two site and has a da as an amalgamated site.

The sellers are selling the site separate and we will be reamalgamating them and re issuing the da to the new company.
I have put some breaks in the the above to make it easier to read.

[geoffk]

I have a strange suspicion that you are in fact an absolute genius...


can't wait for the next chapter!!

[alexlee]

Brilliant stuff, Gross. Very much looking forward to the next chapter.
Alex

[grossreal]

hi
I have been called alot of things but thats not one of them.
I will do part two tonight and post soon its got a few things that are still dependents on others.
The project is in the evolution stage so there are alot of changes that take place as it evolves into the what I call a circular investment.
but that will be explained as we go thru the stages.
people have asked me to explain my system and does it work.
well you are going to see as I go stage by stage and unlike most ??
my part stops at construction as the builder takes over then.
I hope you enjoy and maybe learn if need be.

[grossreal]

hi all
For those interested in the end product and wish to learn more (this post is with regards to the mechanics of how the deal is done) you can go to jaffasoft.com.
this post is more for how its done and why its done that way
Please don't ask about size and prices etc ask those if need be to jaffasoft.
ask by all means why and how we did it this way or that.
and this is not an advertisement

[investor]

Hi

Nice Deal. A site for 6.8M with an end product worth 43M, 15% site cost is quite remarkable. :)

Where in Sydney did you find this site ?

I'm thinking for a 43M site, 1.3M will not get you very far at all.

Also what you have done so far is what all forumites are doing at the moment except you may have done it on larger hit than most. eg finding a ip with a price less than it's value.

Unfortunately you don't want to share in the figures and the details which is were the real brilliance lies.

For example :

Where is the site ? not exact address but roughly to give us an idea of resale values.

How did you arrive with resales of 43M ?
Plays a big role to see whether the site is a viable one.

Is the DA fully approved at this stage and what is the DA for exactly ?

Have you done an accurate feasability study ? Show us :)

What will the construction costs be including demolition, remediation and excavation, and what time frame are you expecting till the end of construction ?

What about borrowing costs for the duration of the development ?

What will be the cost of marketing, agents commissions and GST ?

As you said yourself the market is coming back at the moment hence the reason why you purchased the site less than in 2003.
In my opinion not a bargain but a natural correction in the price due to the market falling.
Hence by the end of the construction you may have to subtract 5% - 10% off your initial end product estimates due to this correction which is estimated to continue for a few years.

I can go on and on with questions I'd like to see answered in PART 2 but you get the picture. :)

Unless you are willing to show us WHY this was such a great site all you are doing is the same as the average Joe finding a Deceased Estate or a house sold at a fire sale due to a divorce settlement (2 partners breaking up as in your case).

I hope I haven't offended you, but the real brilliance in such a development comes in the nitty gritty, so please share :)


Regards

Investor :)

[redwing]

Hi GR

We get the valuer from a lenders panel to value the site as a gross realisation lend of 80% across the board on a 43 mil resale value.
And the same valuer to give me as raw site value.


Great Effort..



Redwing

[grossreal]

hi investor
this is for education so
I will copy your post and answer what we have at this stage
For example :

Where is the site arncliffe 1km from the international airport sydney ? not exact address but roughly to give us an idea of resale values.

How did you arrive with resales of 43M two valuation of end product from two different multinational real estate group ow have valued each unit ?
Plays a big role to see whether the site is a viable one you are right but this is not my first site and yes get it checked before you buy.

Is the DA fully approved at this stage and what is the DA for exactly 91 mixed units?

Have you done an accurate feasability study yes? Show us at this stage no but will put it up once this has evolved

What will the construction costs be including demolition, remediation and excavation, and what time frame are you expecting till the end of construction 17 mil and 15 month fixedx price contract and that will become evident is chapter 2 ?

What about borrowing costs for the duration of the development total grossrealisation lend (hence the name) and capitalised interest?

What will be the cost of marketing, agents commissions and GST this will also be evident in chapter 2 or 3 don't want to give to much away at this stage ?

As you said yourself the market is coming back at the moment hence the reason why you purchased the site less than in 2003 the reason is that this site had a problem that we got rid of hense the price.
In my opinion not a bargain but a natural correction in the price due to the market falling this is not here as a bargain its here to explain how you can do these deals.
Hence by the end of the construction you may have to subtract 5% - 10% off your initial end product estimates due to this correction which is estimated to continue for a few years you will understand by chapter 2 this is a little forward.

I can go on and on with questions I'd like to see answered in PART 2 but you get the picture.

Unless you are willing to show us WHY this was such a great site all you are doing is the same as the average Joe finding a Deceased Estate or a house sold at a fire sale due to a divorce settlement (2 partners breaking up as in your case) This may be like an average joe could do and yes they could as long as they can pull all the thread together and at the end of the day I class myself as an average joe, I just do these average joe projects as a living.
I am giving this not as a great deal others may have that opinion, I have alot better deals that won't get on a bulliten board but this is what is out there and to give those who say you can't find + properties in sydney these are all + properties all 91 .

I hope I haven't offended you, but the real brilliance in such a development comes in the nitty gritty and this bit is right but you will need to follow the chapters and the nitty gritty will be explained, so please share

[grossreal]

hi investor
I just read that you are in sydney
so you will drive near passed the front of this site everytime you go the international airport and you will see its construction while going there.
next door some of the tennants walk to the airport and no the aircraft don't fly over it I think.

[investor]

:) hi investor
I just read that you are in sydney
so you will drive near passed the front of this site everytime you go the international airport and you will see its construction while going there.
next door some of the tennants walk to the airport and no the aircraft don't fly over it I think.


Hi grossreal

Thanks for your reply. Answers alot of questions and gives me and everybody else a more clearer understanding and better grasp of the whole project which I think is a great one. :)

Good luck in this project and thanks once again for sharing the finer details. :)

By the way I think I know which one it is, it was advertised for a while and without giving too much away, is it 8 levels with 2 shops ?

If it is, 73K per site is an excellent purchase, well done. ;)

Regards

Investor :)

[grossreal]

hi investor
There is alot more to this then just the price and will keep you informed.
I will do chapter 2 with in 2 weeks as I've got heaps still to do.
the complete investment will become evident as this evolves I have three of these and they will evolve in the same way this one is the easiest.
any question except location and da numbers I will answer.
this project is about 75% evolved but is changing daily.
and a project of this style and size will keep changing.
I will take questions but the next part will be 2 weeks at this stage.

[quoll]

Thanks grossreal,

This is looking like an interesting read. I'll keep a good eye on it as I think it will learn a lot from it.

Thank you

Cheers
quoll

[grossreal]

hi quoll
I hope so.
This is not my main project and that would take alot more the 2 chapters and this is only a very small part.
hope you enjoy

[grossreal]

hi all
I would like to take this opportunity to thank jaffasoft for there assistance and I don't have any financial connection with jaffasoft
but if you wish to see more about this project go to http://www.jaffasoft.com
join and go to developer hot insight and have a read for the more nitty gritty.

[grossreal]

Hi All
In the break of the Italian game.
So putting my time to good use.
I haven't had time to organise chapter two but hopefully it will be by this coming Friday.
I have a little bit of insight into my world this week and it’s not with this project but with another project but has bearing on this project.
I have put in an offer on a property and have a done a lot of work on it so far, we are at the verge of acceptance.
And the vendor swears down the phone and tells you to get ---- and don't ring him again. I continue and get my ground work done and that gives me another few days,
With the real estates, both mine and there solicitors writing off the deal.
Then Friday comes and the vendor asks the real estate for my Mobil ( the real estate rings and tells me ) I get on the phone before he rings me and asks has he cooled off (he must have or he wouldn't have been asking for my number) he is very apologetic about his bad language and that this project is taking its toll.
So I say this is a soup and you have been messed around but I am still running with this deal and am even further down the path to securing this property.
And told him that he is not the first and won't he the last that has told me to get ---- but that’s my job he had thought I had stopped and walked away.
The motto is
If you line ball a deal make sure that the price you give can stack up on your figures and then don't give up until the contracts ink is dry.
If you are going to line ball make sure you can take the heat that will follow.
And take command of the project.
The reason this soup is similar is that this soup has been on my table three times. And each time it has gone passed the swearing stage
and each time the ball has been dropped my price has come down.
To explain a quick time line of how these soups work for me is as follows
This is another soup
Property comm valuation 1 mil
I neg a deal for 650 owners say no
Go to auction price reached 640 reserves 650
Owners are an assoc (food association of nsw) has to go to meeting.
By the time they get back to highest bidder, lost interest they come to me not interested

Offer 500 owners no again
Owners send to auction again reserve 500
Same people turn up
Highest bid 450 knocked down below reserve go again to assoc meeting again same merry go round highest bidder lost interest.
Ask me again.
Again me no
Next at the general meeting of the assoc call is to put it to auction again.
I go to meeting and get them to vote there and then that I buy the building for 400k and is accepted and hand over 40k in cash at the meeting and show then the money before I ask them to vote.
so you have a 1 mil val property with a 70% 700k lend with a purchase of 400k and got a tenant in within 7 days of owning it on 38k 6%cpi index increase on a 5 x 5 lease and revalued and take equity out in cash.
Soups are very profitable you have to understand how to unlock then and solve the problem and investor says these are not rocket science and as you can see from above 400k is the normal price for a unit or a cheap house in Sydney and this comm is in Marrickville so it is inner west Sydney.
Working on soups you don’t need to do many each year to make it work.
I only have about a 25% strike rate and have a lot of costs and time that requires to be written off.
This post is more for people to understand soups.
And whether a soup is because of divorce, breakup, death, liquidation, money problems or in the case of the grand hotel internal fighting by lender (Australian bank), government officials and a construction company they all have a problem and they all have a key.
your job is to find that key.

[handyandy]

Hi All

Property comm valuation 1 mil
I neg a deal for 650 owners say no
Go to auction price reached 640 reserves 650
Owners are an assoc (food association of nsw) has to go to meeting.
By the time they get back to highest bidder, lost interest they come to me not interested

Offer 500 owners no again
Owners send to auction again reserve 500
Same people turn up
Highest bid 450 knocked down below reserve go again to assoc meeting again same merry go round highest bidder lost interest.
Ask me again.
Again me no
Next at the general meeting of the assoc call is to put it to auction again.
I go to meeting and get them to vote there and then that I buy the building for 400k and is accepted and hand over 40k in cash at the meeting and show then the money before I ask them to vote.
so you have a 1 mil val property with a 70% 700k lend with a purchase of 400k and got a tenant in within 7 days of owning it on 38k 6%cpi index increase on a 5 x 5 lease and revalued and take equity out in cash.
Soups are very profitable you have to understand how to unlock then and solve the problem and investor says these are not rocket science and as you can see from above 400k is the normal price for a unit or a cheap house in Sydney and this comm is in Marrickville so it is inner west Sydney.
Working on soups you don’t need to do many each year to make it work.
I only have about a 25% strike rate and have a lot of costs and time that requires to be written off.
This post is more for people to understand soups.
And whether a soup is because of divorce, breakup, death, liquidation, money problems or in the case of the grand hotel internal fighting by lender (Australian bank), government officials and a construction company they all have a problem and they all have a key.
your job is to find that key.

Hi Gross

What was your thinking when you turned it down after offering $650k why had you 'lost interest'. Just a strategy or had you had second thoughts?

Why was this a soup? Apart from the assoc bull***t!

Cheers

[grossreal]

hi handy andy
Its a strategy when there is only two bidders and I'm one.
and the property has problems which this had and in fighting.
then it was going to go to a general meeting.
basically it had to.
There was infighting for 2 years and they were lossing money hand over fists.
something had to give and I happened to be there at the right time.
the problem was two fold 1 the infighting but two is that for an association. To take a hit and a loss it has to go to a general meeting and no purchaser is going to be invited to that meeting so you have to organise it so that it happens the way you want it to.
I had offered twice and was not going to offer again so I got the people with in the organisation that were negotiating with me to invite me and this they did.
soups have lots of different elaments some easier then others,
the really hard or complicated inter group fighting are the most profitable (in the case of the grand hotel profitable not in money or profit upfront but very profitably never the less).
why because if you have 4 groups fighting you will find 1 group that will be on your side.
use this group to gain the inside information needed.
loan amounts,
what the real problem is,
who is in control of the project,
what they will go down to,

I take it as a battle so who's allie and who's foe.
Then formulate an attack plan which will bring lots of different people with lots of different skills inc solicitor, brokers,real estate,accountant,programmers and the list goes on.
For this project the one for this original post has a group of 9 different companies all that have not got paid anything yet.
hope this helps to understand a bit about a soup.

[grossreal]

hi all
just a little side line I have organised with the assistance of jaffasoft to have a section that will have zipped mp3 files for people interested in this project.
I will put up a word doc part 2 here so people can read it or they can down load the zip and listen if thats better
This site will be doing all the pre sales also you do have to register and there is no cost
unfortunately you can't store here the first zipped file is 7.5 meg. and the second is 1 meg.
This is not going to change organising part 2 but with these soups they have more turns then a snake
And for the last 4 weeks we have been organising the vendors with the assistance of 2 solicitors and 1 barrister very interesting and that will be about part 4.
will come back soon

[rj]

Sorry gross - but I find reading your posts extremely difficult and confusing.

Good luck with it though.

RJ

[Glebe]

Geez Gross you're good. I'm buying a car soon, can I bring you with me to haggle the dealer! :D

[moosta]

i'm fascinated. thanks gr and please keep it rolling

[grossreal]

hi glebe and ramone_johnny
thats ok ramone_johnny.
at this stage its not a matter of luck
its are your numbers been right and if they are you win
and if there not you won't know until 2 years from now
and then you may have a problem
to date I haven't had a bad run and thats no indication that the same will continue
but for me its never luck
as dazzling says on so many times the devil is in the detail
and that you have done your numbers on your system
if that system has been right so far every time then thats not for me luck
thats structuring for success I adjust my figures to allow for market movements
most builders allow 5% contingenties for blow outs
I have allowed 7%, plus the builders has 5% in his figures so its a total 13%.
most valuers use one company to do market valuations
I have used 2 plus my own.
In this market there are alot of deal around but make sure that you are using a mind set of rules that you understand work.
example
you can walk into my office and think its a mess but I know where everything is and can find it very easilly
The same with these projects people look at them and think they are a mess
you must be able to untangle them quickly in your mind and work out can you achieve your set goals.
this post is for people to understand how these projects evolve.
and they are like a watch maker and he has a person with a handful of cogs and says this was a watch and is a mess know
and he takes that away and a couple of weeks later you have a working watch.
most people would throw that handfull of cogs in the bin and say to hard but not if it was an original rolex not me.
and you would get the same answer if you were the holder of the cogs and told the watch maker here they are and good luck?.
he would say the same as me this is not luck, this is skill and training and doing it for some considerable amount of time.

and last but not least most of the watch repairs are german or chinese ( from my dealing with them)and most are not very good at trying to understand,
so for those that wish to learn, I have no problem posting
if you wish to listern thats ok too (I find that the mp3 are easier to organise) but as in the part 1 this is not an easy project to do and most probably won't do a similar project but their are small ones similar are all over Australia and if you learn a bit all well and good.

This is not my largest project nor my most complex that one we are still working on.
if you want the mp3 they will only be on jaffasoft.com as he is zipping them and you can down load .
this is not to be seen as any critism of ramone_johnny,
this is just to explain that I don't work on luck neither should anyone else in investing I look at winning and success they are very different.
I looked at buying the casino in vanuatu not playing on its tables as I don't, haven't and have no interest in gambling
I have interest in the profit margins of casino companies
and glebe not a great negotiator with car yards there are so many cars that I generally go to auctions and check them out there.
haggling or negotiating is a skill and a very important skill at that.
the more you now about the product or person the more chance you have of winning the contest,
so find the car you want get prices from the ebays, carson line etc got o the dealler next door ask him what he's got better then this car and then go into battle.
my son wants a old mini 1000 in a dealer
we have been there 3 times now
it was at 4999
1st down to 4500
2nd down to 4250
3rd 4000 and last week end 3500 and we are going to test drive it
we may get it for 3250 yet
or walk away.

[aef]

Gross,

Thank you for posting with such detail.

I have learnt a lot in this thread and I appreciate the insight into how you structure your deals.

Keep it up!

Regards
A

[Spiderman]

Sorry gross - but I find reading your posts extremely difficult and confusing.

But GR's posts are worth the effort :)

Here's some tips that could help:

1. With right mouse button copy the content of the post.

2. Paste it into Word Pad and play with it.

3. With liberal use of the space bar, breaking a sentence here and putting a comma there, you get something like this:


hi handy andy

Its a strategy when there is only two bidders and I'm one.

The property has problems which this had and in fighting as well.

Then it was going to go to a general meeting because basically it had to.

There was infighting for 2 years and they were lossing money hand over fists.

Something had to give and I happened to be there at the right time.

The problem was two fold:
* the infighting
* that for an association.

To take a hit and a loss it has to go to a general meeting. No purchaser is going to be invited to that meeting. So you have to organise it so that it happens the way you want it to.

I had offered twice and was not going to offer again. So I got the people with in the organisation that were negotiating with me to invite me and this they did.

Soups have lots of different elaments, some easier then others.

The really hard or complicated inter group fighting are the most profitable (in the case of the grand hotel profitable not in money or profit upfront but very profitably never the less).

Why because if you have 4 groups fighting you will find 1 group that will be on your side.

Use this group to gain the inside information needed. eg
* loan amounts,
* what the real problem is,
* who is in control of the project,
* what they will go down to,

I take it as a battle so who's allie and who's foe.

Then formulate an attack plan which will bring lots of different people with lots of different skills inc solicitor, brokers,real estate,accountant,programmers and the list goes on.

For this project the one for this original post has a group of 9 different companies all that have not got paid anything yet.

Hope this helps to understand a bit about a soup.



Consider the above exercise like a cheap 'trick & flick' reno but for phrases not properties.

99% of what is above is original.

The structure of a sound reno property is (or should be) sound. Just like the sequential logic of GR's post. Thus both are good bases to build upon with minimal work.

Any needed changes were cosmetic only.

Nothing substantial need be added. For instance, the kitchen did not need to be put into a bedroom and the last sentence did not need to go in the middle.

Like a reno that's cheap but stunning, the most benefit was through the creative use of existing and empty spaces (which cost nothing, unlike extending a roofline).

And in both cases the value added can be considerable :)

Peter

[grossreal]

hi Spiderman
well done
I never thought of it like that some very good lateral thinking.

[celica]

Grossreal you have inspired me. My problem is small potatoes for you but you have inspired me to keep going when I had thrown it in the bin

Have had my eye on a block of land with a decrepit house on and approvals for two double storey units. Vendors are dreaming of prices way out of the ball park and I was waiting for reality to set in. Spoke to agent and said keep me informed but it went off the market. Has been on the market for approx 6-8 wks. Rang agent and he said vendors had refused 445 (I was thinking to make money, need to purchase at $400) and unrealistic vendors were thinking 485. I ventured, what about holding costs and interest rates going up? evidently vendors have plenty of money and aren't worried, but will not be developing it themselves
I feel the universe is telling me to hang in there, as we had a visit from a guy dropping off something and after chatting discovered his wife actually lived in that house as a girl. six degrees of seperation. would you belive it.
And now your post has revived my interest. Perhaps I should ring agent and say to keep me informed again, or track down the owners of the property myself. If you had any time for some thoughts I would really appreciate it

[grossreal]

hi celica
couple of things not all my projects are this size I am doing two sets of duplexes that were a soup in harrington waters and thats a very interesting senario that one but not in this post.
in answer to your question of what to do here is a quick run down of what I would do.
first find out as much about the vendors talk to neighbours council etc.
then get an agent that is in opposition to the agent that is selling the property get him/her to get a residex or rp data history on the site.
next find out any problems that are with the site if thats a problem get some one to get you probable problems, wink wink nudge nudge, then go to the real estate that gave you the residex info and tel him your offer and you don't want to deal with the agent selling it ( you are immune to his aftershave I Don't care give some reason) now you have the game.
your real estate will find the vendor(thats his or her job).
tell him her you will give 1% commission at one value and 1.5% at this value and make it a sliding rule down.
they are working for you.
make sure before you set the hound after the rabbit that you have all your pre work done that's
evaluation, fixed price contract, etc done

[celica]

Thanks very much for taking the time to answer. I have another real estate agent I deal with in the area, so will take your advice and put him on it. First re has taken down his sign and said it is off the market, so that should be ok. I can think of a couple of reasons, position wise I could highlight as problems (I gather this is to justify making a lowball offer). By "make sure I have done my evaluation, fixed price contract, beforehand" do you mean with the r.e. or my own figures of whether I can make money? Do you mean so I can be serious and offer a deposit cheque if they accept.
I think it will take longer than this as they have refused 445 in the last couple of weeks so it will probably take a while for them to start to wonder what they are actually going to do about it. The house would need quite a bit of money spent to rent out.

[grossreal]

hi
Thanks very much for taking the time to answer( no problem). I have another real estate agent I deal with in the area, so will take your advice and put him on it. First re has taken down his sign and said it is off the market, so that should be ok. I can think of a couple of reasons, position wise I could highlight as problems (I gather this is to justify making a lowball offer). By "make sure I have done my evaluation, fixed price contract, beforehand" do you mean with the r.e. or my own figures of whether I can make money( your figures to make sure not only you can make money but an exit strtigy if your numbers are wrong)? Do you mean so I can be serious and offer a deposit cheque if they accept.
I think it will take longer than this as they have refused 445 in the last couple of weeks so it will probably take a while for them to start to wonder what they are actually going to do about it. The house would need quite a bit of money spent to rent out.

[grossreal]

hi all
sorry for the delay but here part two it is modified for reasons at this stage I will keep to myself.
I have deleted the money values at this stage and will fill them in at a later date they are in my copy put they don’t need to be up at this stage.
Chapter two
This whole project is not going to be short and as I said in chapter 1 this is an evolving project.
First to understand to solve a soup your need to get to the core of it and to do this you have to understand a few things.
1. the players in this game ( and I look at it as a game of chess but this is not a normal game of chess I have a three way chess set and play that with the boys but this is a multi player chess set and you have to move to what you think the others are going to do).
2. The boundaries of the project I.e. a start time that you are going to look at and were it is at that point in time.
3. the outstanding costs on the project
4. the vunerabities of the other player
5. as much history you can gain on your opponents
6. players out side the game that will influence the game(banks, creditors etc)
7. Any stumbling blocks that at this stage haven’t been move or can’t be moved at this stage for what ever reason.

To answer the above question and for you to get an idea of this project this chapter will be on the history of the site and from there you can see who the players are and why it became a soap.
In or around 2003 two owner were approached by Mr. A(I am not going to put names to this project as it does not assist and they may not wish to be named) came to them and offered to option there properties and to put the da into Rockdale council.
The price offered was( ) and the option fee was ( ) (now the option fee was 10% but the didn’t do the contract that way fault 1(I will put in the faults that is my interpretation and as this is my story I think I can))
Mr. A went and paid for the drawing and da cost around the ( ) mark and submitted them to council (councils can be real problems and if you are a council officer reading this then you can see it from my side of the fence).
Council knocked it back.
The drawings were done 5 times each time they were knocked back.
The clock was ticking and by about a year it was decided to take the project to the land and environment court (problem 2 fault 2 if you have not got the money or have not shored up your lend to construct which Mr. A didn’t)
After about 350k project comes out of L&E and now has a da but Mr. A has no money on top of that the goals have moved we are now 2005 and a corrected market.
Mr. A has been paying to hold this option with Mr. B and Mr. C and they have given him 6 option renewals to get thru L& E and the cost of the renewals is a total of( ).



Wait but there more
Mr. B and Mr. C both have lends on the sites with two banks and they have been holding the site also and they have paid in my calcs ( ) in holding cost and have ( ) from Mr. A so they are short by ( ). and the market is falling (banks don’t like this).
So Mr. A comes looking for finance and to get out of this deal so I put a syndicate together of investors to buy out the deal and run with it but Mr. A gets very greedy and what’s to large a share of the pie so the deal falls thru.
Mr. B starts to look for people to get him out of this deal not all just him.
Again it comes on my desk this is another 8 months latter.
But this time there is a couple of added players (in the form of two banks).
So to muddy the waters even more and to add heat.
I bring in a real estate to mediate the deal and his instructions are
That nobody knows who I am until I deposit the property.
I have all the history on the site and all the cost
by this stage Mr. A can’t get finance and Mr. B and Mr. C are on the ropes with a two bank beating the s—t out of them and about to liquidate.
I have a contract at ( ) I take the deposit out ( ) and take off 5% ( ) with an understanding to the real estate ( buyers agent if you wish ) that if they don’t accept that it comes down 5% per time they say no and they bring it to my desk.
Now we have a game.
We have Mr. A, Mr. B, and Mr. C (and two banks that want the site sold) playing one side and me, the agent, my bankers, on the other
We have the AAA in our hand and they have a site.
This is were it gets tricky you need to get the vendor working with you not against you and you need to find a player on the other team to assist you Mr. B was our player, he hated me swore down the phone and the names weren’t nice(the Italian used nicer words to the Frenchman) but he likes the agent so it good cop, bad cop I say this is what I want and I will tell the agent he goes back and changes a little with, I will accept this,
By this time it March 2006 three years latter from the start of this whole deal and Mr. B and Mr. C are at there wits end they want it sold so they agree to sell.
The next problem was the da as the da was held by the option holder this we need to get over but not let Mr B or mr C know that this is what we had in mind mr B an mr C brought in there own real estate mr D and he was the one that sold the site and set up the option for mr A this put a unknown quantity into the pot as he wanted to know who we were or nothing was going anywhere so we had stale mate if I told them who I was they would not have sold the site to me I had a hold deposit on the site with the buyer agent and had everything in place I had the lend organised so the next thing was the contracts.
Unless I told them who the buyers were (we had set up a new clean skin company and trust) not just the company.
So what do I do.
Simple let them stew for a while.





Then go and see mr D tell mr D that we have been told that we were buying this property and if the reason that you won’t sell this property is because you don’t like the buyer then the two bank will be informed and the price goes to ( )and also that we reserve the right to take legal action from our barrister that if then we still don’t buy the site we will take an action for break of a commercial contract as we had put a commercial deposit on the site with a view to purchase and this was all set out in a letter from form a barrister.
This brought all back to the negotiating table and know with the letter it told them who was buying the site.
This did not go down well and lots of calls later the contracts are with us I have posted the well after the contracts have arrived for security of the site reasons and that I won’t have time to do this size of word doc when I have this project at full steam so I have done this one and part three prior to full steam running ( like the chef with I made this one earlier).
Time frames and players
Labour content about 9 months of work 50hrs per week roughly
9 companies
Four solicitor groups
3 banks
Two valuation companies

Chapter three coming up

[MIZBUF]

Good read- G.R- I woulda played hard ball right from the start if Ihad been Mr A--Gone straight to L& I Court ater the 40 days (Not sure if that is still the rule) of Council not giving me a reply. I suspect these blokes are the sort who are always doin deals under the table- "I know a bloke in Council" etc sorta thing. They won't go near lawyers blah blah--till they are in a real mess then bleat about the costs- Now it has cost them-

[grossreal]

hi
hind sight is a great virtue but few have it.
Mr A is no fool and has been in the industry for a long time, some times these projects take a life of there own and you can't see the woods for the trees.
also in the 2003 time this was a market that is very similar to the perth market now a very heated market and it was not going to correct but it did.
yes it is requirement that the council must give you a reply on your da I have a couple of developers that lodge the l&e at the same time as they lodge the application for the da strathfield and ashfield are two that come to mind.
you can play hardball but its not cheap a l&E case is with a barrister and will set you back about 300k.
your
I suspect these blokes are the sort who are always doin deals under the table- "I know a bloke in Council" etc sorta thing. They won't go near lawyers blah blah
can be hell of a lot cheaper but I wouldn't stoop to that level.
this soups are not one problem they are a group of problems that come together to cause a problem and a very expensive problem when I am close to the final of these post and my involvement is close to the end and the project goes on without my involvement which will be soon I will come back to this post and add the costs that each has lost in real values.
The min is over a mil each.
so we are talk not only a big project but big losses also.

[grossreal]

hi all
havving a look you cant modify an old post so will repost with the values at a later date it will be part two but with the amount in the brackets

[harrywyborn]

Hi GR,

Thanks for the interesting post. As only a tadpole in the ocean compared to you, it is very interesting to see the mechanics behind larger deals. Now to apply those mechanics to grow into a well oiled machine is my next process.

I have bought, sold and renovated RE, now im looking to venture into the world of small time developing. With the ambition of building the knowledge and know how to become a successful developer.

I am currently working on figures for developing duplexes. Any advice on what to look out for would be very appreciated.

Regards.

[grossreal]

hiharrywyborn
as I posted before this is not the only project that I am doing at the moment and they are not all as big as this one.
I am doing 2 sets of duplex's with a builder which is about 80% complete and I am going to see them in 2 weeks I hope at this stage.
I think keep an eye on michael's post with regard to his development in nth shore and it will give you a bit of help.
with developing it is very similar to a paint artist
as in that every picture is different and so is every development and just like the principle of painting is simple
paint on a canvass, so is developing bricks or concrete on the ground.
and just like painting the better the quality the higher the price and the better picture is the same as the better designed building.
for someone to be trying on a forum to explain developing would take a very long post and I think it wouldn't be the same anyway as every site has lots of variables here are a few.
1. council ( they all have there own rules)
2. lay of the land and its problems.
3. access to and from the site
4. material being used to construct (and that alone is in its self a big problem)
etc
and thats but a very small part.
this post is to assist in solving problem site not how to develop them.
I am not a large fish in this market not even small fish.
I'm a fish that is swimming my own race and swimming very well at this stage.
I particularly aim on a very small and very niche market( all thou at this stage that niche is growing).
and specialise with a group to solve these projects problems.
some times they come off as I wish and some times they don't.
I hope you all learn something from this project.
there is a long way to go yet but unfortunately I can't get into developing here as well.
I will post the next part in about 3 weeks as I have a few things to organise and will be off the air most of that time I think unless I can get a sat nav access.
enjoy

[JoannaK]

Hi GR...

just reading the fin review the other day and I noticed an ad in the paper for a site in Arncliffe..

it says:

Prime residential development sites x 2

Lusty Street, North Arncliffe
2 adjoining sites - total 3665m2
close to wolli creek station
da approved for 89 residential units and 2 shops
in one line or as two separate sites.

expressions of interest...


Is this site that you've been working on for the last 8 months?

[JoannaK]

Hi GR,

just thought you'd be interested to know that that same ad was in the Fin Review again yesterday. Looks like they don't want your money...

How did the site end up for sale again...I thought you'd secured it and it was a goer.

Are you able to update us all on the goings on?

[grossreal]

hi JoannaK
current position is that they have not finished with there internal wrangling. and as they have a very large amount of money in losses currently,we have put in place a sunset clause, this project has got alot still to run and unless they wish not to go slipping down the liquidators path they need to move very quickly.
we have removed our deposit and have put in place the second drop in price to take effect at the sunset clause time.
in this market currently you do need to be very carefull that you have all your finances covered which we do currently
but as a seller, make sure that you have a buyer
to be throwing 2 mil into the sydney market place in a development site is not done with any great ease and vendors need to understand this.
This site is an example of the sites available and what needs to happen to get them across the line.
currently I have three sites that have deposits on them all very similar to this in that they are all soups, this one, a 109 unit in marrickville and 21 unit in auburn and two I am just trying to organise for them so the are not un common.
if a soup owner wishes to get out of there problems then they do need to understand that its not just the money they have lost but the potential loss by not doing what needs to be done.
to give you all an idea with out going it to at this stage
the final numbers, total cash loss on this site is over half the value of the land so we are talking over 4 mil thats money that is not comming back and has been spent or lost and is currently being held by two bank against no security as the lvr are over 100%.
you can advertise this site to find out what people are interested to pay for it but at the end of the day who ever buys this site will need to have the finances, the know how and the backing to fend off a couple of legal eagles.
hense we are in no hurry to rush in and get involved in that little battle
we have told them in no uncertain terms what we require and that if thats not going to happen this will.
this post is to explain what a soup is and how they work
as I said some come off some don't
you are looking at a soup that is going to cost someone alot of money (not me) and if there was some one that runs head long into this site( again not me)( and I don't think there would be and I have told them that) they will need to check there figures and costs very well.
I will keep you posted as it becomes closer to the time and as it progresses.
hense the reason I didn't post before as I am leaving them to clarify there position I am in no hurry for it in this market
I can give you a list of sites if people wish to get into large developing but I wouldn't recommend it.
the hardest part of a development is
one finding and negioating the right price at the start
and two getting the finance to do the project.
the building part you can leave to a project manager and builder.
I will post the out come but if this does go down that slide and into administrators then I will tell you the current position and for those in the same position a couple of ideas of what should have been done to keep the wolf away from the door and then it will be a case as usual that the terms of the agreement are not disclosed thats the norm for administrators.

[grossreal]

hi all
with regards to this post I will run thru the numbers at a later date as you can see from the time of the last post there has been alot of time spent and yet its a case of two steps forward and one back plus in the same time I have sealed two deals so I have given all concerned a very close time line.
I think by friday this comming week I will post all the detail if people are interested.
the next cab off the rank is the juye project and if those have been to the presentation,
they will know about it,
at one time there was a discussion about putting a page in some where on china and what is going on.
well for those interested not from an investing directly point of view.
I have two people there currently and will have an office very shortly.
I am equity lending into china not real money (as it stays here) as such and that is done out of bank of china here in sydney.
the chinese goverment has changed the rules with regards to investing in china but as we are jv'ing the rules stay the same.
this equity investing structure is to be used for both china and wa and is being well received
the following is not any form of advertising but is for information only.

[JIT]

Hi,

Just read this thread, quite easy to read the posts here actually. Great insight into the skilful art of negotiation when purchasing a problem site (`soup`) at this level! It seems so central and important to the whole investment process here. Certainly smaller residential investors could benefit by applying this to their deals.

I love the idea of dropping your price with each offer.

GSJ

[grossreal]

Hi all
With regards to this project I will now post the detail of this project as we have exchanged and are moving forward.
the detail of this post is for information only and the numbers have been rounded up to make it clearer understanding of the complexity of this project
The value of the site in 2003 was 10mil
An option holder paid 800k for an option on the land to purchase the land at 8mil
And proceeded to spend in excess of 800k in added option fees from that date today.
The land owners had to hold there sites from then to today and has been paying holding cost in excess of 1.5 mil.
And
I purchased at 6,840,000 how did I get to the 6,840,000 easy 8,000,000 less the 800k deposit that’s 7,200,000 and les 5% as that’s the market movement down so 6,840,000 the site was purchased as a raw site with a da that is purchased each site separately.
To negotiate this I used a real estate agent as my purchasing agent.
Once the price was agreed we then had to reduce the deposit.
The deposit was at 684k so we got it to 5% 342k then we reduced this to 100k and exchanged on 100k so in reality that’s a 100k deposit/exchange (with limited liability to the new lusty street development company only) on a potential 43mil end product site and a 34% return.
Once we had a deal I also had to get the da and this was a job in its self.
I did a deal with copyright owner of the da plans and got those assigned to the owner of the land and in return I get the cc plans done via an associated company.
To get this thru I had also to negotiate a very sticky group of a legal mined field and to do that I negotiated that if you don’t sue him I will organise this, and then if you don’t get sued, then you will not sue him and around it goes.
These are very difficult to achieve and are very protracted we went thru 5 sets on contracts as we changed this and then changed that,
on top of that we have a vendor that has been told that someone was going to buy this property and all he sees if the moving of chess pieces on a commercial business table and its all to much to comprehend.
After getting thru the legal mined field it was a case of get the deposit down which was achieved and then the deal was done.
So I got 100k exchange on a 43mil site end value, with a fixed price contract and full lend for the major part of the construction and know have the da as well.
And a happy vendor a happy real estate as they have followed this deal with great interest (the owner of the real estate was surprised that the accepted the 5% and then 1.4%) the time to get the reduction of 3.6% was about three weeks of negotiating but I am not paying anything put my time and it doesn’t tie up another 256k cash.
Even the loan the broker that has organised the loan I negotiated the brokerage fee and brought it down to a rate that I was happy with and is under ½ % of the total loan.
At 6,840,000 that’s 75k per site and the norm is 95k that’s a value of 8,645,000
So for me it’s a good deal,
The land mark white valuation is 7,200,000
I organised a full Gross realisation loan valuation by landmark white is 39,900,000
With a total construction Inc land of 29,000,000.
now its onto presales and equity inputs

For those interested why I do these deal I think that you may get that from reading a very good article Sydney morning herald good weekend 0ctober 7 2006 page 31 titled harder faster richer and why Mr Moses stays at macqarie, is very similar to why I do these deals.

[JIT]

Nice work grossreal.

Think I will have to step up the negotiations on my next resi. IP.

GSJ

[TomL]

Well, based on that last post, i'm glad I persevered reading your stuff GR.

I dont care what anyone writes about you .... fwiw you have my respect.

I will take what I can from it all, and see how I can incorporate your ideas into my own investment machine.

T.

[MichaelWhyte]

At $6,840,000 that’s $75k per site and the norm is $95k which would represent a value of $8,645,000. So for me it’s a good deal. The independent land mark white valuation came in at $7,200,000.

I also organised a full gross realisation loan valuation by landmark white for $39,900,000. The total construction cost including land is estimated at $29,000,000. So now its onto presales and equity inputs.Lawrence,

From the above, can I assume you intend to actually develop the site yourself and attempt to realise that $11M in profit between the $29M total development cost and the potential $40M gross realisation?

Well done on securing the site at such a great discount to market.

Cheers,
Michael (Another one of your protegee's ;) )

PS I hope you don't mind me paraphrasing your quoted lines a little bit to make it clearer to me.

[grossreal]

hi michael
yes michael I will be constructing the project
got a fixed price contract turn key and lend in place.
this one there is only me ( funny that )
its 39.9 lowest and 43 highest valuation and thats at todays prices this will take 30 months to complete from settelment. cc starts tomorrow and into council before settlement.
we will have the building down and excavated by december this year.
no ferrari here but this is my retirement nest egg not bad semi retire at 48.
I don't think I will fully retire.

[WashingtonBrown]

Enjoyed these posts.

What would you say your major risks are now?

I would have thought sales in this market.

Wat level of pre-sales are required for funding of this project?

Or have you already answered this...and i am being lazy?!!

Whos the builder?

I was surprised you said the building part was the easiest part of this.

I have never this to be the case in med/high density res - when using an external builder.

However, at least in this market you will be able to pick and chose a builder - not like 5 years ago.

Many congrats.

Regards

[grossreal]

hi washington brown
Enjoyed these posts.

What would you say your major risks are now I don't have any I just have to get my equity and others equity and the lenders lined up to come in at the same time and thats fun?

I would have thought sales in this market sales are sales I have already got 7 mil in presales lined up and need to get 14 mil within the 42 days to settlement and asap after that to go into construct the area that ths site is in
is a new near enough suburb.

Wat level of pre-sales are required for funding of this project 14 mil?

Or have you already answered this...and i am being lazy?!!

Whos the builder bridge construction with sears management as managing agents/project managers( plus I will have a few of my other builders going to site I have four running with me currently?

I was surprised you said the building part was the easiest part of this for me it is the easiest as I don't do anything in theat bit of the project I rely on my builders to a great degree and the payments come thru our accounts dept so for me thats the easy bit the hardest part is my part ( but thats me)
and thats to get the deal to a format that we can get the lend and get the deal done once thats done the rest is relatively easy but thats only because I have done it before .

I have never this to be the case in med/high density res - when using an external builder not sure about others but I always use external builders and fixed priced .

However, at least in this market you will be able to pick and chose a builder - not like 5 years ago all ready organised the builder.

Many congrats.

[WashingtonBrown]

Jeez your more confident than me in this sydney market!!

You dont have any risks. Really?

Surley rates over that period are A risk (I dont think they are going anywhere fast...but they are A risk - never known a construction loan that can be fixed.)

Just because your in is $100k doesnt mean thats your exposure? If so - can i have a piece of that action!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Further getting $7m in pre-sales in 42 days is B risk.

I am sure you have spoken to prject marketers at the moment and aware of how many people/investors are trying to rescind let alone getting into to new stock.

I cant go throught the details of the property investment data i have from clients...suffice to say....sales aint wat they used to be!!!

As for a fixed priced contract. No such thing in my opinion. Have never ever documentation 100% on this size proj. at this stage.

As for relying on builders to a great degree.

Eek fraught with danger!!!

Thats just the cynic in me! - I truly wish you all the best.

Regards

[grossreal]

hi washington
Jeez your more confident than me in this sydney market that maybe so but you are looking at the curreent market and we are looking at a 30 month time frame and what you expect the market to be at that time and yes I maybe more confident then some people in htis market!!

You dont have any risks. Really yes I have have looked at this project as I do with all my projects and evaluated the project and how this project will be done interest rate rises and costs changes are risks that you factor in so other then the ones that I have already factored in I don't see any risk at this astage but that may change?

Surley rates over that period are A risk (I dont think they are going anywhere fast...but they are A risk - never known a construction loan that can be fixed no they are not fixed they are capitalised and when rates move on a capitalised loan they have changes in equity requirements from the lenders a lender gives you an amount of interest and a term of the loan it is very similar to a fixed loan it doesn't fluctuate its a set figure.)

Just because your in is $100k doesnt mean thats your exposure? If so - can i have a piece of that action!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! my exposure is my exposure and sorry you can't

Further getting $7m in pre-sales in 42 days is B risk not if you have already organised to get to these levels of presales this is and has been a long process and the structure for presales is in place.

I am sure you have spoken to prject marketers at the moment and aware of how many people/investors are trying to rescind let alone getting into to new stock depending the stock and depend what they are trying to sell there is alot of stock out there but there is a couple of things that make this development a better investment then the others
1.the body corporate fees for the 2br unit in this development will be around 450 per qrt int he one across the road it is 1800 per qrt and next door is 1200 per qrt.
2. because these are two towers, the number of units together after the first floor is 4 per floor so less people crowded together.
on return alone the rental will be the same but these units are looking at about an extra 2% return which for the sydney market is very good going if the ones across the road are at 4% these are at 6%
we are looking at 30 units as per sales and I don't see it as being an issue at this stage

I cant go throught the details of the property investment data i have from clients...suffice to say....sales aint wat they used to be again it depends what they are looking at!!!

As for a fixed priced contract. No such thing in my opinion. Have never ever documentation 100% on this size proj. at this stage well again not sure of your fixed price contracts this fixed price contract which was drawn up mby bridge construction,sears project management and ours selves is a very large contract and there is very little thats not fixed in it.

As for relying on builders to a great degree.

Eek fraught with danger I deal with alot of builders and in all the projects that I have done I haven't as yet had a problem and this will be our multiunit development!!!

Thats just the cynic in me! - I truly wish you all the best thanks you can only control what you know you can control the others as with everything come and go

[WashingtonBrown]

You worry me......

$17m for 91 units in two towers...where you will lose lots of construction effiency?

I know its a fixed priced contract...Again - no such thing.

They always are at the beginning of the project.

15 months to build 91 units in two towers?

Joanna - what do you think of these numbers?

25% presales...without a CC? How does that work? What are people buying?

Do you have a draft strata yet you can post here?

Why dont either the builder or pm show anywhere on google?

Seeing as your posts end with an invitation to join your projects...what are the websites of your team so the forum can do some research?

Who is funding this...let me guess...not any of the majors?

I guess my concern is your posts invite novices to join you - you say all risk have been equated.

And simply - i guess i disagree.

Regards

[ani]

Extremely pertinent concerns, Tyron.

I also could find nothing on the builder or PM.

To those who may be thinking of investing, do your due diligence:eek:

[coastymike]

Gross,

What concerns me is that when I go to Jaffasoft's website

'Lawrence Hogan released news today of his group providing investors with a chance to be part of an 91-unit development. The units have already secured a tenant and will be consumed with the tourist dollar as they fly in for the convenience of the serviced apartments. Located right next to the Sydney Airport. How charming I wish we could all fly around like this. Now as an Investor the return is around 8%. This gives you a chance to buy into a unit(s) where you otherwise would not be able to, assuming
that you don't have the funds to invest in 91 units straight off the bat. "

and even your signature seems to be encouraging investors to join this project. Without approval from ASIC I really believe that you will be breaching the class orders regarding management investment schemes as you are clearing over the thresholds. I know you say that people can't invest in this project but Jaffasoft seems to indicate that people can. either they can or can't. It concerns me that if you are in fact offering public investors to invest in this project then you could be facing imprisonment if you don't comply with the rules regarding managed investment schemes.

[see_change]

Lawrence , I suppose the most striking thing for me at the moment is the recognisable expertise of the members who are raising concerns about your development and techniques over the last couple of weeks.

I too would be interested to know what ASICs feel about your approach. Don't you have to release a prospectus is more than a certain number of people are involved in what appears to be an investment scheme. I thought it was 20 .

See Change

[thefirstbruce]

I can't understand why Bridge Constructions Pty Ltd hasn't been registered for GST since 2004. Does that mean they have't been active in that time?
http://www.abr.business.gov.au/(pb1ovpjrinssbm3lor4ldp45)/abnDetails.aspx?History=True&abn=66102649347&ResultListURL=..%252fsearch.aspx%253fSearchRequest%253dbridge%25252bconstruction%25255e%25252c1%2525 2c0%25252c0%25252c0%25252c0%25252c1%25252c0%25252c0%25252c0%25252c0%25252c0%25252c0%25252c0%25252c0% 25252cTypical%25252cTypical%25252c0%2526start%253d0

And Sear Management has only been around since 2004.
http://www.abr.business.gov.au/(pb1ovpjrinssbm3lor4ldp45)/abnDetails.aspx?History=True&abn=91111684130&ResultListURL=..%252fsearch.aspx%253fSearchRequest%253dsear%25252bmanagement%25255e%25252c1%25252c0% 25252c0%25252c0%25252c0%25252c1%25252c0%25252c0%25252c0%25252c0%25252c0%25252c0%25252c0%25252c0%2525 2cTypical%25252cTypical%25252c0%2526start%253d0

[thefirstbruce]

And your signature might have to be revised over at PI.com Lawrence....surely that isn't legal?????

http://www.propertyinvesting.com/forum/topic/24317/5.html?sortfield=&sortorder=&SearchTerms=soup


"here to help
If you want to get involved in some of the projects I'm involved in email to ultraclean@hotmail.com
currently looking for up front money at 15% p/a pm me if you wish"

[Mark_B]

Bruce

Is his current signature any better?

If you wish to get involved in any of my projects email me at grossrealisation@hotmail.com

M

[JoannaK]

You worry me......

$17m for 91 units in two towers...where you will lose lots of construction effiency?

I know its a fixed priced contract...Again - no such thing.

They always are at the beginning of the project.

15 months to build 91 units in two towers?

Joanna - what do you think of these numbers?

25% presales...without a CC? How does that work? What are people buying?

Do you have a draft strata yet you can post here?

Why dont either the builder or pm show anywhere on google?

Seeing as your posts end with an invitation to join your projects...what are the websites of your team so the forum can do some research?

Who is funding this...let me guess...not any of the majors?

I guess my concern is your posts invite novices to join you - you say all risk have been equated.

And simply - i guess i disagree.

Regards

Hi Tyron,

I agree with what you're saying. $17m to construct 91 units over 2 towers seems ultra light in my opinion (thats only $186,000 per unit, but I guess they could all be one bedroom units....which then raises other questions about target markets and the like). I would expect, taking into consideration parking, the large amounts of common areas and open space required, I would be budgeting at least $24m. Based on those figures my building should only be costing me around $7m..and we both know that that's not the case :)

I totally agree with your comments about a fixed price contract....contracts, whatever form they take, are not really worth the paper they're written on unfortunately...and even still....there are so many variables in the construction game that it's virtually impossible to have a fixed price contract....especially on a project so large.

And, 15 months to build....i highly doubt it. As you know, we're only doing 32 apartments plus commercial plus parking, and that alone is just about 15 months. In order to get that sort of time frame a developer would need to engage a real kick butt builder with a cast of thousands...but, without reading back, I thought he said 30 months...which may be more realistic.

I know a developer can have presales done without a CC...but 25% in 42 days...that's a hell of a lot of contra-deals that need to be done...I agree that at the very least a draft strata plan needs to be prepared first, and that in itself can take about 4 weeks to do.

I would be very concerned if anyone I knew were considering an investment.

[WashingtonBrown]

Hi Tyron,

I agree with what you're saying. $17m to construct 91 units over 2 towers seems ultra light in my opinion (thats only $186,000 per unit, but I guess they could all be one bedroom units....which then raises other questions about target markets and the like). I would expect, taking into consideration parking, the large amounts of common areas and open space required, I would be budgeting at least $24m. Based on those figures my building should only be costing me around $7m..and we both know that that's not the case :)

I totally agree with your comments about a fixed price contract....contracts, whatever form they take, are not really worth the paper they're written on unfortunately...and even still....there are so many variables in the construction game that it's virtually impossible to have a fixed price contract....especially on a project so large.

And, 15 months to build....i highly doubt it. As you know, we're only doing 32 apartments plus commercial plus parking, and that alone is just about 15 months. In order to get that sort of time frame a developer would need to engage a real kick butt builder with a cast of thousands...but, without reading back, I thought he said 30 months...which may be more realistic.

I know a developer can have presales done without a CC...but 25% in 42 days...that's a hell of a lot of contra-deals that need to be done...I agree that at the very least a draft strata plan needs to be prepared first, and that in itself can take about 4 weeks to do.

I would be very concerned if anyone I knew were considering an investment.

Joanna - that was the number i was thinking.

Hooray....people seem to be coming out of the woodwork.

Perhaps Gross realisations tag should read.

"Enter at own risk"

All the best - last i will say on the matter...suffice to day i am glad depreciator and bmt are listed on his website...cause i certainly wont be putting my hand up!!

SO Scott you can do the marketing and Brad (BMT) you can have this project from a banking point of view!!!

Good luck to you all and your families!!!

Regards

[geoffw]

Is his current signature any better?

If you wish to get involved in any of my projects email me at grossrealisation@hotmail.com Agreed that the sig crosses the line into solicitation. It's been changed.

[grossreal]

hi all
not sure what you are looking at coastymike
I have been to his website and am on it as I type and its not there and not sure were you have seen that information and the clock says 11.00pm and mine here says 3.34 and there is no such indication.
and will find out from jaffasoft directly but as far as I am concerned there is no such offer taht I am aware of and I would know if I have endorsed it .
If jaffasoft is offering to his website partisipantsthen thats up to jaffasoft but looking at his web site he's not.
and sea change unfortunately you may think that every thing is a scheme but sorry to say wrong again.
I have not looked at why bridge construction have not been registered for gst but can ask them but that would be an issue for the managing company and will ask thanks for the tip.
with regard to efficiency, design and construction pricing we have had those checked and not sure why there seems to be alot of concern for with regards to this project I thank you for your concern.
I will leave my qs people my managing company and my builder to build it its great to give an opinion and as I have always said they are great to get but i am not getting others builders to build this building.
you may not think that there is a fixed price contract but our legals says there is and will run with there directive.
not sure why such a flurry but seems to be alot of interest.
if I do ask for investors or we need to sell any more persales at that stage my people will let people know.
at this stage thats not the case
so not sure where your information coasty mike came from.
but again will ask

[coastymike]

Gross

This is from the home page. Click on the tab home and it will take you there. It also has your picture next to the article. I have taken a snapshot and can send it to you it states

"
Deal time: 22/06/06: A deal has come across the desk again. Check the web site regularly for information on the latest deals arriving!

Lawrence Hogan released news today of his group providing investors with a chance to be part of an 91-unit development. The units have already secured a tenant and will be consumed with the tourist dollar
as they fly in for the convenience of the serviced apartments. Located right next to the Sydney
Airport. How charming I wish we could all fly around like this. Now as an Investor the return is around
8%. This gives you a chance to buy into a unit(s) where you otherwise would not be able to, assuming
that you don't have the funds to invest in 91 units straight off the bat.

That's the brief. You will need to get your name down by (by subscribing)four weeks from this release
date. Details will be in this website in the next few days and alternatively sent out to subscribers. If you
want to be sent deals as they arrive just subscribe in the top right hand area of this web site. It's free to
subscribe. We only need your email and username so it's quick for you."

[duncan_m]

hi all
not sure what you are looking at coastymike
I have been to his website and am on it as I type and its not there and not

I see it.. maybe your browser is broken. screenshot attached. ( welcombe to my browswer ):

[WashingtonBrown]

hi all
not sure what you are looking at coastymike
I have been to his website and am on it as I type and its not there and not sure were you have seen that information and the clock says 11.00pm and mine here says 3.34 and there is no such indication.
and will find out from jaffasoft directly but as far as I am concerned there is no such offer taht I am aware of and I would know if I have endorsed it .
If jaffasoft is offering to his website partisipantsthen thats up to jaffasoft but looking at his web site he's not.
and sea change unfortunately you may think that every thing is a scheme but sorry to say wrong again.
I have not looked at why bridge construction have not been registered for gst but can ask them but that would be an issue for the managing company and will ask thanks for the tip.
with regard to efficiency, design and construction pricing we have had those checked and not sure why there seems to be alot of concern for with regards to this project I thank you for your concern.
I will leave my qs people my managing company and my builder to build it its great to give an opinion and as I have always said they are great to get but i am not getting others builders to build this building.
you may not think that there is a fixed price contract but our legals says there is and will run with there directive.
not sure why such a flurry but seems to be alot of interest.
if I do ask for investors or we need to sell any more persales at that stage my people will let people know.
at this stage thats not the case
so not sure where your information coasty mike came from.
but again will ask

Dear Gross

I am glad you are getting your people to speak to your people....because quite frankly...if they were speaking to real people...NO ONE IN THE REAL DEVELOPMENT WORLD WOULD UNDERSTAND!!!

I know i know...i said last post....but some people excite me!!!

"with regard to efficiency, design and construction pricing we have had those checked and not sure why there seems to be alot of concern for with regards to this project I thank you for your concern.

I will leave my qs people my managing company and my builder to build it its great to give an opinion and as I have always said they are great to get but i am not getting others builders to build this building.
"

The statements in bold kill me...and shows a complete lack of development skill.

FINAL WORD FROM ME I PROMISE

Regards

[grossreal]

hi coasty mike
if you have alook that was removed and it was something that was beening sent to jaffasoft web site partisipants and I did ask him to remove it and that was done over a month ago I don't have the date but jaffasoft will know.
as I have said I have not nor am I advertising for persales for this project
if jaffasoft has people that go on this website and they wish to offer that at this stage they haven't its up to them.
if you have a look there has been no information with regards this project for about 1 month.
thanks

[duncan_m]

hi coasty mike
if you have alook that was removed and it was something that was beening sent to jaffasoft web site partisipants and I did ask him to remove it and that was done over a month ago I don't have the date but jaffasoft will know.

Its still there right now..

[myla]

hello,

i have sent email to forum manager and mentioned the concerns on this stuff in previous posts and I think its a joke that any of the threads that GR has started recently have not been closed

other posts by GR which I have highlighted, specifically state he finds "hurt money assistors" on this forum or others

numerous questions have not been answered

remember anyone offering 15% return is also offering high risk attached to the investment

I think it really hits at the credibility of this forum

thankyou
myla

[coastymike]

Gross,

You may have asked for it be removed a month ago but it is still up there. You can see from Duncan's snapshot that it is still on the internet as at
Wednesday October 11 2006 3:55PM. It has not been removed. But that is something you need to take up with Jaffasoft.

[Jimmyjamjars]

if you have a look that was removed and it was something that was beening sent to jaffasoft web site partisipants and I did ask him to remove it and that was done over a month ago I don't have the date but jaffasoft will know.

if you have a look there has been no information with regards this project for about 1 month.
thanks
I have stayed out of this thread as it reeks but you must really treat us as a pack of idiots at times GR. You tell us you aren't asking for investors then totally contradict yourself by inviting people into your projects in your sig until it was recently changed. You then tell us that the posting on Jaffasoft's website doesn't exist when we are currently going there and reading it now !!!!
Three lines later, you tell us if we go and have a look, we'll see that there's been no new information posted for about a month. How can we if its been removed. My monitor must have saved a 3 month old screenshot of it then. Thats the only explanation I can come up with coz its not there, you asked him to remove it and that was done over a month ago.
JIM

[grossreal]

hi coastymike
not sure if you are aware but jaffasoft it not always in an area to communicate with him and his website has nothing to do with me he runs his own race and I have told him that it did need to be changed and if that the case I will tell him.
duncan has sent a jpeg of his website but again when I type and I am typing know and I refresh my website its not up there so it maybe a clitch in his site or what ever
as the clock that was both in yours and duncans was wrong itsaid 11.00 am and was 3.30 and is now 5.31 and the clock is correct
so I don't know what happened but again this is not my website.
i have alot of people that are associated with my group and they have there own website and what they advertise is up to them and if I see an issue I let them know
this snap shot that you have was from the 6th month this year and I don't think I need to tell jaffasoft what my issues were with it and those issues have nothing to do with this forum.
for me if you see a home page or anything that has been archived and re surfaces for what ever reason it seems to me that jaffasoft may well have been up dating his site or what ever .
but there is nothing wrong with my brouser or my computers and I still don't see it.
I have copied duncans jpeg and sent to jaffasoft to let him know that you have seen it but when he gets into a zone he will get internet access and will read it himself and if he wish's to respond its up to him.

[ok180]

I guess i may as well chime in..

I run a reofixing business in Sydney so i have my hear to the ground when it comes to developments and costs. A few points...


1: Bridge constructions, never heard of them. Can they handle a 20m + project, don't know.

2: 15 months build time is possible, ive seen it done on projects that size. Would have to see designs to further clarify.

3: $17 million to build. Unlikely, If they're all studio's or 1 bedders and very basic i guess you may do it.

4: Jaffasoft website, looks like something from Geocities.

Thats my 5 cents worth.

[grossreal]

hi all
I think I will leave this post with the following.
as lot of people are throwing figures here that they have no idea of what they are saying and these I take as opinions not facts.

$17 million to build. Unlikely, If they're all studio's or 1 bedders and very basic i guess you may do it this just is not the case and for people that are supposed to be in the build industry you need to check your figures

why do I say this is a fact
because one of my group just did it and unlike other sites
I won't point my fingure that ran out of funding
my funder has 165k still to give us 5% and there build cost was and is 180k
maybe you are building with the wrong materials or your costs are higher or you don't build to a strict time frame.

you can a budget of 24 mil and you can can look at the design as split design and if need be but this isn't your project and at 24mil wouldn't get a lend.

and in responce to this

All the best - last i will say on the matter...suffice to day i am glad depreciator and bmt are listed on his website someone knows something I don't and it just not true
they are not on my website never have been and don't intend being i don't mind opinion but this is not fact and is simply not true
and

agree with what you're saying. $17m to construct 91 units over 2 towers seems ultra light in my opinion depends which product(thats only $186,000 per unit( and my last development was 2 and 3br and came in as was budjected at 180k, but I guess they could all be one bedroom units....( they arn't the majority is 2br)which then raises other questions about target markets and the like). I would expect, taking into consideration parking( the parking has already been approved), the large amounts of common areas and open space required, I would be budgeting at least $24m as above. Based on those figures my building should only be costing me around $7m..and we both know that that's not the case [COLOR="red"]but what was the original budjet and why did you have ablow out I have not had a blow out of my sites [/COLOR

opinions are great but we do need to have a few facts thrown in
just incase people start to believe the opinions.

[thefirstbruce]

Bruce

Is his current signature any better?

If you wish to get involved in any of my projects email me at grossrealisation@hotmail.com

M

Mark, the PI.com sig has this more blunt bit:
currently looking for up front money at 15% p/a pm me if you wish

That line is a lot more overt.....

GR, so what's the story with Bridge and Sear? Is Sear Management related to the Sear Group at 4 Rothschild Ave, Rosebery 2018?

[JIT]

Bump...

Grossreal, any updates on this development?

GSJ

[grossreal]

hi gsp
there has been alot of developments with regards the site and for the vendors non are good.
I have not given it away at this stage but it gone from bad to alot worse
need less to say my offers to fix the problems did not get me across the line at this stage.
we have already got one party in administration and Im talking with the administrator.
alot of people would be wrong in thinking that its as simple as putting up the money and purchasing a site.
thats not the case with a soup.
you do have to make sure that your position is not compromised by indemifying some one else.
the reason that I have stopped updating is that there is not alot more I can do.
untill we can be given clear title or the ability to have clear title then I don't move.
the market is not getting any better from developments sites
I have not changed the presales in caveat emptor as I have a couple that are looking at vendor finance back on sites here in sydney and I have a couple of other sites that I am working on and if interesteed ask away.
once an administrator is appointed then I stop talking on boards about it as it does get messy.
sorry for that
I will if I am able to post what the wash up of it is.
just as a note
I started looking at this site and the value was 115k per site
when I offered it was 75k a site
today I have an other offer in at 40k a site on three sites and am going to one today to talk to the owners over coffee.
I have one that the bank lvr is 155%.so thats not good for them
the market has gitters at the moment and the sites are sat adding up costs
and mine are all problem sites.
for me its a good market for investment.
as long as you can get over all the problems to get the site moving.
this one may not be able to do that unless we can get all the people working together and where you have some wanting to sell, some not wanting to sell, some want to sue,and others trying to stop the paperwork the deal is still a soup.
and I do say I think I am good at what I do but at the end of the day I am not soloman and I can't solve everyone problems or views.
I have the presales and I have had the finance organised 4 times know and each time at the 11th hour a problem occurs and I am not buy part of a site.
and I would not recommend any one to go into any deal unless the deal is in the format you want.
my .002

[JIT]

Thanks GR, interesting stuff.

GSJ