Paddling our canoe.....Mk II

[Dazzling]

Currently having a crack at a building (see below), after losing out on a couple of good deals that have passed by recently.

Wish us luck !! :)

[kaf]

Oh wow!!! How many offices are in the building and do you mind giving us the figures on the deal?

... and I was so proud of our block of 3 units :o

kaf

[JIT]

Wow! Can see a Telstra building nearby. Looks like it's in the heart of the CBD. Good luck this time.

GSJ

[Brenda Irwin]

Looks nice Dazzling. Good luck in your offer. :)

[alexlee]

Looks great, Dazzling! Best of luck and hope you give us more information and figures! I really enjoy reading your posts as it gives me ideas about what I want to do in the future, after developing my resources more.
Alex

[Dazzling]

Thanks for all of your good wishes. All we can do is give it our very best shot and hope to be selected to negotiate with the vendor.

One of my friends has been watching the whole pathetic process of us going up against the big companies and funds over the past 8 or 9 months via this nonsense E.O.I. rigmorale, and likened it to a game of blindfolded pinata (sp ??). The best you can ever hope for is to have a swing in the dark and hope for the best. Backroom deals, quiet whispers, cash incentives slipped to the agents....who knows what is going on, we are blissfully ignorant of everything.

Unfortunately, over a certain thresh-hold, none of the usual agents will sell properties via private treaty or auction - they all put it out to Tender, go via an Expression of Interest (the worst), or accept Offers to Purchase. All 3 methods suck big chocky rocks, as it gives 100% of the power to the vendor, and as a potential purchaser you are kept completely in the dark - unable to even be given the chance to negotiate with the Vendor.

If I popped my solicitor's hat on, I've probably already divulged too much, but I thought sharing the journey might open up some exciting possibilities for forumites of where all of this house and IP gathering may end up, if you just keep steadfastly applying the same principles. The "gearing ramp" can suddenly get quite steep, and this opens up some fantastic deals.

This property is worth about 170x what we paid for our first PPoR nine years ago. Co-incidentally, it rents out for 170x what the same property rents out for today......without 170x the headaches of dealing with residential tenants.

I'll let y'all know if they ever deem us worthy to talk to.

[The Y-man]

....I thought sharing the journey might open up some exciting possibilities for forumites of where all of this house and IP gathering may end up....

Many thanks Dazzling (can't send you more kudos at present) :)

Cheers,

The Y-man

[LesleyA]

I'm impressed Daz - but where's the garden!!!

Thanks for sharing your new property aspirations and hope all goes well with the negotiation challenges.

Lesley

[NigelW]

I thought sharing the journey might open up some exciting possibilities for forumites of where all of this house and IP gathering may end up, if you just keep steadfastly applying the same principles. The "gearing ramp" can suddenly get quite steep, and this opens up some fantastic deals.

This property is worth about 170x what we paid for our first PPoR nine years ago. Co-incidentally, it rents out for 170x what the same property rents out for today......without 170x the headaches of dealing with residential tenants.

I'll let y'all know if they ever deem us worthy to talk to.

Daz

You're an inspiration to us all. Please keep swinging - that Pinata chock-a-block full of goodies is definitely within reach!

Cheers
N.

[saucy gibbon]

One of my friends has been watching the whole pathetic process of us going up against the big companies and funds over the past 8 or 9 months via this nonsense E.O.I. rigmorale, and likened it to a game of blindfolded pinata (sp ??). The best you can ever hope for is to have a swing in the dark and hope for the best. Backroom deals, quiet whispers, cash incentives slipped to the agents....who knows what is going on, we are blissfully ignorant of everything.

Unfortunately, over a certain thresh-hold, none of the usual agents will sell properties via private treaty or auction - they all put it out to Tender, go via an Expression of Interest (the worst), or accept Offers to Purchase. All 3 methods suck big chocky rocks, as it gives 100% of the power to the vendor, and as a potential purchaser you are kept completely in the dark - unable to even be given the chance to negotiate with the Vendor.



How dare those evil vendors attempt to get the most they can for their property.

Sheesh, what a naive view.

[JFisher]

It makes me wonder where I'll be in 9 years time! All the best Dazzling and I hope if you hit the pinata, the chocky blocks fall on the others trying to do the same!

[yadreamin]

good luck Dazz, l hope it goes well for you and that chain wielding Mrs of yours:D :p
I too will follow your journey with interest.
cheers yadreamin

[Mark Laszczuk]

Hey Daz,

I keep this quote close at all times, cause I never know when I'm gonna need it (I've needed it a whole lot lately, by coincidence):

'Success is not about brilliance. Success is about perseverance. Hanging in there is of far more importance than any other single factor.'

Thanks Kristine.

Yo Saucy, what's the point of your post? You sure know how to hold a grudge.

Mark

[redwing]

Best of Luck Dazzling.....hope your not paddling up...with a barbed wire canoe

Nice Building, hope you come up "Trumps"

[sailor]

Thanks for you posts Dazz. This is way outa my league, and I always wondered how this stuff happened. So many thanks for the education.

[saucy gibbon]

Hey Daz,



Yo Saucy, what's the point of your post? You sure know how to hold a grudge. Are you a woman or what?

Mark
[/SIZE][/FONT][/FONT][/FONT]

Sup Mark ?

I thought the purpose of my post was obvious, though it didn't involve back slapping so I guess its point will be missed.

[JoannaK]

Best of luck Dazzling. When does the EOI end?

I hate EOI and have noticed alot of sites being sold that way now too....I simply won't go near them. I prefer open and honest negotiation to create a win/win for all, but that's just me....maybe I'm just too idealistic...

[Dazzling]

I hate EOI and have noticed alot of sites being sold that way now too....I simply won't go near them. I prefer open and honest negotiation to create a win/win for all, but that's just me....

Same here Joanna, but most of the time you don't even get the opportunity.

Last one we had a crack at, there were about 7 bidders. We were the top bid, but had one clause on the EOI - finance. 14 days to go unconditional. The agent carried on like a pork chop, saying that everyone nowadays only offers cash unconditional. If you don't have the full amount in cash to plonk down on the table - unconditional - they advise the Vendor to ignore you.

They didn't even let me speak to them. Oh well, we lost out on a good property, and the Vendor lost out on an extra 200K.....but I'm sure the agent was happy.

We are getting pretty sick of playing these b/s games with EOI and Offers to Purchase. Our banker is very much getting sick of it. We've never purchased a property with this method, and if this one fails again....that is, you have no clue what's going on and never get to speak to anyone (5 in a row now), we'll leave the area for good and go back to our old tried and tested method of actually talkign with Vendors and chopping the ridiculous agent's right out of the loop....in the end they aren't a party to any contract, we've found you only need a competent Seller and a competent Buyer for a transaction to proceed. Everyone else is just a hanger on.


Hey - and saucy - cheer up mate, life's good. I'm not looking for any back slapping. I'm hoping to share some of the experiences the wife and I are going through with the forum. There seems to be some interest in the subject matter. Good luck with your investing endeavours.....would always enjoy hearing what deals you have actually transacted, rather than obtuse comments from the safety of the non-playing sidelines.

[Mark Laszczuk]

Sup Mark ?

I thought the purpose of my post was obvious, though it didn't involve back slapping so I guess its point will be missed.

Hi saucy,

I feel it may you that missed the point. Daz is quite obviously upset with the way transactions are handled - in that he doesn't even seem to get a chance to talk to the vendor. His gripe had nothing to do with vendors wanting to get the most out of the deal at all.

As pretty much everyone else in this thread has stated, we all enjoy reading about Daz's adventures in commercial property, so may I politely suggest if you don't like it, then don't read his threads. It's really not difficult.

Mark

[Andrew_A]

At first I thought that photo was a joke.

Then I realized it wasn't. Wow... A whole building, thats neat.

Have to raise my blinkers from the purchase of a little box on a suburban piece of land and look skywards.

I have long thought sale by tender was the best way to go, even for resi property that has a bit of X factor about it, certainly better than auctions for the vendor anyhow.

170 x original PPOR purchase in 9 years, that's quite a journey. Is it like 70% commercial lending on the loan or something different? Would be a very interested reader of more details about how such a deal is put together.

[JFisher]

Excuse my ignorance but I would like to know what EOI is?

[Mark Laszczuk]

Hi Julie,

EOI = Expressions of Interest.

Mark

[JoannaK]

Expression of Interest.

It is when you register your interest in a property and outline all your terms, conditions, price etc for the property. All these get collected and the owner basically picks the one he likes best and proceeds to negotiate with that one person.

[Ausprop]

I dont think it is good for the vendor or the buyer (EOI) - often i have looked at properties that i would love to acquire but with EOI i just wouldnt bother as i wouldnt know where to start and it would most likely be waste of time

[saucy gibbon]

Mark,

Is there some unwritten law of this forum that states that I must agree with every post. And if I dare not to agree am I forced to say nothing.

Dazzling,

Please bait the hook a little better than that, though it has provided a little window, maybe some light will shine in.

As I have stated before I do not invest in commercial, retail or industrial property. It does not suit my investment profile. As to why it doesn't I do not need to disclose, it just doesn't. Therefore in your mind I guess my opinion, my experience counts for zero. So be it, I sleep the same either way.

I just typed a dozen or so lines explaining my comment and now have deleted them, I couldn't be bothered.

It seems that unless I'm high five-ing posters my comments are deemed to be counter-productive. Seems debate is not welcome, fair enough, I won't continue.

[JFisher]

Thanks Mark and Joanna...I was trying to guess but nothing popped into mind with those letters. I was enjoying the insight into what the commercial investors go through but some of the jargon had me stumped.

[Dazzling]

Best of luck Dazzling. When does the EOI end?


Well, we've been beavering away, reading a mountain of DD material on the property, and drafted up a one page expression of interest and submitted it to the Vendor's agent a couple of hours ago, just prior to the closing deadline.

It's now in the lap of the Vendor, and we are in that uneasy period that I liken to the eye of the cyclone, when it's all calm and everyone just sits and waits.....and waits....and waits.

If we are anointed as the 'chosen' Purchaser, I imagine things will move fairly quickly, with the contract for sale being signed within a week or two.

Right now it's all a bit surreal as there is no actual financial committment. It gets fairly serious fairly quickly if you 'get the call'. We've only had 'the call' once in all our efforts over the past 9 months. All the others you just get a one page rejection letter in the snail mail about 2 weeks after the deal has been wrapped up.

The tenant mix was fairly good, with the State Govt as the majority tenant, and a smattering of super funds, ASX listed co's, couple of professional firms, a Bank on the ground floor and the Vendor, a State authority body, wanted to stay on for 10 years in the top floor.

Offered price equated to a 10.9% yield, so if we get rejected....oh well, if we get accepted....happy days....and bye bye paid job.

Andrew....no the photo is not a joke, that's what it looks like. The wife reckoned it looked about as interesting as those old fashioned money boxes in the shape of a Bank. I suppose architectural standards have moved on a bit since it was built way back in '72.

[Ausprop]

would you think it unlikely you would get it on a 10.9 yield? just asking as i thought these things usually went at about 7%?

also when you put the offer in, have you cleared the finance already with your lenders, or do you just have a perceived lending strategy that you will panic to achieve if you get the call?

[Ausprop]

can i also ask... when you do one of these EOI's - is there a prescribed form or do you just free form up your own sort of offer coverign what you feel you should address?

[Dazzling]

Good question ausprop. Yeah this one is a bit funny in that the Owner actually has to fork out for the outgoings, both the statutory and daily costs, so the rightful way to express it would be on a gross yield, which is the 10.9%.

Taking the full costs out of the equation and reverting back to a nett yield, that number comes down to a most unattractive 7.85%. Don't worry, my full intention is to lump all of those horrible outgoings back onto the tenants as the years tick by and the existing leases come up for renewal / extension. That's normally a good way of sneaking up the yield curve and squeezing every last drop out of it, without scaring the incoming tenants with massive hikes in $ / sqm / pa.

The vendor is proposing to shoulder their fair share of outgoings with the new Lease, so that's one floor sorted, just need to get the others on the same bandwagon.

No - finance is not cleared as yet....bank takes a while to crunch the numbers and scenarios around. We plan on borrowing the lot, plus stamps plus all the other gumpf, plus a bit more on top to help us through the first six or so months, as it's usually a bit rocky with uncertain cashflows.

We are a pretty simple mob. Our EOI is a plain one pager with all of the stuff necessary for the Vendor to make a decision whether they wish to talk to us or not. No point going into reams and reams of waffle. At the end of the day they are after one figure, so that's what we give them.

[Mark Laszczuk]

Mark,

Is there some unwritten law of this forum that states that I must agree with every post. And if I dare not to agree am I forced to say nothing.

Dude, it's not about 'agreeing with every post' at all. It's about you taking an obvious swipe at Daz, which seems to have carried on from the last time you guys clashed about Daz discussing comm. property issues.

Debate is great - I love it! You've been around long enough to know I'm never afraid to voice my opinion and I like to encourage others to voice theirs too. Unfortunately, most of the forum people are girls blouse wearing PC's who would rather keep their mouths shut than say something that might be construed as 'controversial'.

I and I'm sure everyone else would love to hear about your views and opinions, but what you stated in that post was not a view nor an opinion, but a cheap backhand directed at Daz.

Mark

[saucy gibbon]

Mark,

I don't agree with your comments. I refuse to discuss this any further, there is no point.

[Dazzling]

Out of curiosity, I've just re-read this thread, from top to bottom, and it's so disjointed and scrappy, with a whole bunch of irrelevant bickering interspersed within interesting questions.

In the interests of keeping some semblance of credibility, I'm going to exit stage left on this thread. This is not how I envisioned this property journey to be.

It's a shame really, as I gather there are a few forum members who would like to see how it pans out. I don't wish to share the details if this is how it has to be on this forum.

Anyway, I'll leave it here, and let you guys tear each other to shreds. Good night.

[JFisher]

I hope you don't mean permanently Dazzling. I, for one, would love to hear how your endeavor progresses. I'm sure the people in disagreement with each other's posts have finished the banter and the thread will be back to the topic at hand.

[grossreal]

hi dazzling
I for one will not tell you how to suck eggs
but I will give you a bit of advice and you can try it on your next project.
the grand hotel vanuatu was a soup and had 3 waring parties and it was put out to eoi.
now I was not into eoi so what to do.
for me simple
I didn't put in a tender or eoi
I put in an offer to buy.
but you may say that the real estate won't accept that.
true but the owner will.
and in the case of the grand hotel
I talk to and sent it to all waring parties.
I have some satisfaction in the fact that I won the race
I did not buy the hotel as the under bidder told me that I would be in court for 5 years and not open the hotel ( he died within two months of our meeting and he didn't open it either)and he offered me something I liked better but thats by the by.
my advice is simple
find the owners
forget the eoi and go into bat with the owners
if need be as was the case with the grand hotel go there and knock on doors.
there is an opening in any and every deal ( I have not found a deal that you can't open)
you just have to find it.
eoi is
they want to find out who is interested.
so kick down the door and say I am interested and this is how much I am will to pay ( not in real terms or they will throw you out on your ear)
money does get exchanged to open doors
so find out who the door open is for your deal.
I only go after deals I think I can get and I know you do the same
if you have had 5 tries and they have all not gone well try some thing different
you are sailing with the wrong sail change it.
and gibbon I am all for people to stand up and be different
and I don't really care if you like dazzling or not
nor do I care if you like mark or not
but I do care that we have people on this planet that don't have the same views as everyone else
and I may not agree with your views but I stand by the rsl motto of
I will fight to defend your right to a view, which some places on this planet do not have that right
so just because people don't agree with your view
does not mean you take your ball and go home nor should you think that just because some people have that view
everyone has that view.
If I were to believe that I would have taken my ball and left many months ago.
we are here to give views, dazzling may take on board my ideas as to eoi
he may not
there is no back slapping in my post
you will find that in all my post I don't denegrate posters ( in many I should)
as I don't see any positive in it.
you may not think you have anything to gain from dazzling, this may or may not be the case but there are alot that can gain if only some assistance.

you may have an area that you excel in and posting is the only way to show that.
we all have different types of investing
dazzling goes for comm, I go for comm and developments
I think that we need to all learn and if my little bit will help dazzling kick down that corporate door then I have assisted a person that has assisted a few here.
thats my .002

[Andrew_A]

Andrew....no the photo is not a joke, that's what it looks like. The wife reckoned it looked about as interesting as those old fashioned money boxes in the shape of a Bank. I suppose architectural standards have moved on a bit since it was built way back in '72.I didn't think it was a joke because the building needs a good update and I would never buy something with those cornices!

I thought it was a joke because the idea of buying something that large is beyond where my thinking was, eg: something big funds and the Packers did, but then I worked out it was for real.

Good luck with it all, look forward to reading more details if you come back to the thread, much easier task to place someone on ignore in an internet forum than it is to do such a deal as this I suspect.

[Dazzling]

Given the number of PM's I've received over the last 48 hours, I've decided to carry on with describing this property acquisition journey as it unfolds.


We got "the call".....3 or 4 calls in fact, the hunt is on....and I can smell blood.


The wife and I are up against two other superannuation funds, one based in Sydney and one based in Melbourne, although I expect the Melbourne based one may also be a tenant in the building itself.

Both of the super funds slapped down a very large lump of unconditional cash on the Vendor's table. They are also trying to get it on the cheap, with gross yields in the low 11's. We pitched our bid at very high 10's....with the added proviso of a 20 day finance clause, which, as we expected, went down like a lead balloon.

We can only surmise we are slightly higher than the other two super funds, or they would have screwed up our offer and chucked it in the bin already.

On Friday afternoon there was a tense 3 or 4 hour period where, over the course of 3 or 4 phone calls, I tried desparately to wrap up the deal by getting the Vendor to write down and sign, within the hour, on their corporate letterhead, that they accept my bid for the property....and in exchange as a sweetener I'll add a further 100K to the purchase price.

Without sounding like a complete knob, I absolutely love that pressure cooker environment of closing a deal and convincing a Vendor to accept the offer. The last success we had was well over 2 years now, and I didn't realise how much I relished the thrill of the chase.

The Vendor was teetering on the edge, but Friday afternoon-itis got the better of him, and he backed away, saying he'd put it to the Board over the weekend, make a decision over the weekend and inform the Buyers on Monday morning.

This property is worth more than our entire portfolio, so a huge leap forward if we do get it. Might see how it pans out for a year or two and then try this LOE lark on for size. We'll need appreciation rates of 0.2% p.a. to live off comfortably......and even the wife agrees that's conservative enough to guarantee we'll achieve it.

Needless to say we are having a tense weekend playing the waaaaaiiiiiittttting game. As big Kev in Qld would say....I'm excited !!!!! :D

[kathryn d]

Dazzling,
That building looks very impressive.
When I first looked at the picture, it opens only halfsize. The you need to scroll doooown. WOW!!!

The chase is very exciting.
Of course we are still doing it with residential, but we are branching out. We are developing a mansion ATM, with changing of zones etc.
With this property it is 90% vendor financed, so we offered 100% asking price just to knock the other offers off the table.Long story but we ended up chasing the owner as his REA had other buyers HE wanted to buy it and wouldn't summit our offer.
We have also considered looking at another building with mixed use. Baby steps for us.

Best of luck to you and your wife.
Very interesting thread, and I will be also following your progress.

[sailor]

Oh Dazz! This is just sooo cool! I can't wait to find out Monday's decision...although I have a very good feeling about it. You have made your offer very appealing to the vendor...that should make them feel good too.

[redwing]

Your Wife is right Dazzling it does look like those old Commonwealth Bank money tins

After seeing your other deals I can't imagine how much this one would be...ALL the best for Monday

[JIT]

Hi Dazzling,

Thanks for continuing to share your story here. What's amazing is that you started, like many of us here, with negatively geared resi. IP's, and now, you and your wife are going head to head with large super funds for a CBD office block! Quite remarkable.

GSJ

[willair]

Needless to say we are having a tense weekend playing the waaaaaiiiiiittttting game. As big Kev in Qld would say....I'm excited !!!!! :D
Dazzling when i look at the building you and your Wife intend to buy it sort
of sends me into a cold sweat, only because i don't understand how to
even start to buy into that sort of investment so thankyou for sharing
this part of the real estate game.
I hope the sale goes your way but in the end if it's meant to happen it
will if not then a person like you will have a back up in place..
Good Luck willair..

[jingo]

Thanks for all of your good wishes. All we can do is give it our very best shot and hope to be selected to negotiate with the vendor.

One of my friends has been watching the whole pathetic process of us going up against the big companies and funds over the past 8 or 9 months via this nonsense E.O.I. rigmorale, and likened it to a game of blindfolded pinata (sp ??). The best you can ever hope for is to have a swing in the dark and hope for the best. Backroom deals, quiet whispers, cash incentives slipped to the agents....who knows what is going on, we are blissfully ignorant of everything.

Unfortunately, over a certain thresh-hold, none of the usual agents will sell properties via private treaty or auction - they all put it out to Tender, go via an Expression of Interest (the worst), or accept Offers to Purchase. All 3 methods suck big chocky rocks, as it gives 100% of the power to the vendor, and as a potential purchaser you are kept completely in the dark - unable to even be given the chance to negotiate with the Vendor.

If I popped my solicitor's hat on, I've probably already divulged too much, but I thought sharing the journey might open up some exciting possibilities for forumites of where all of this house and IP gathering may end up, if you just keep steadfastly applying the same principles. The "gearing ramp" can suddenly get quite steep, and this opens up some fantastic deals.

This property is worth about 170x what we paid for our first PPoR nine years ago. Co-incidentally, it rents out for 170x what the same property rents out for today......without 170x the headaches of dealing with residential tenants.

I'll let y'all know if they ever deem us worthy to talk to.

Thanks Dazzling for the information. This is really inspiring. We only have a few IP's, but to imagine that it could lead to this one day!!!

All the best with the deal. I thought that real estate agents for resi IP's were not transparent enough. But this is really 'cloak and dagger' material!!

Love to know how it all ends up.

Regards Jingo

[Mark Laszczuk]

Hey Daz and wife,

Nice one bruvva! Good luck tomorrow, I'll be keeping my fingers crossed for you.

Mark

[Dazzling]

Update for those not asleep as yet.

Nope - she died a natural death.....same blindfolded pinata type deal.

Was in the hunt initially, but then one of the REA's contacts (it was duel listed) of the other REA let someone else come in well after offers closed, and they swanned in and took it once they knew what they were bidding against. Apparently that's all OK and I'm meant to be happy about it.

As usual, we were kept in the dark completely, and all concerned got a bit stroppy when I started questioning hard the cloak and dagger tactics of this EOI nonsense. Basically they said that's the way they like to conduct things and too bad if I don't like it. At least I made some friends...:rolleyes:

We've moved on....

[JIT]

Was in the hunt initially, but then one of the REA's contacts (it was duel listed) of the other REA let someone else come in well after offers closed, and they swanned in and took it once they knew what they were bidding against. Apparently that's all OK and I'm meant to be happy about it.

These commercial REA's are sounding dodgier than the residential ones?

GSJ

[kathryn d]

Sorry to hear Dazzling.

Every REA has a "buddy" who seems to have inside info on great deals.
They probably knew exactly what this buddy needed to offer in order to clinch the deal.

Someday Dazzling, I'm sure you will be in that position.
Maybe until then, you can go after smaller deals. Swoop in and grab up properties that only most of us here could dream about.

Be sure to let us know when you find the next one. Always interesting.

[sailor]

Tis a wee blow Dazz...sorry to hear this.

However, do you know who the REA is that clinched the deal? He sounds like a good operator....maybe he might have something else on his books you might look at!