New Property Concept

[Reno Funders]

I think you would need to be far more established before the reno company gives a damn about your potential to give them more work.

Lets say you take a job on the Central Coast for the first time under your proposed arrangements. The reno company will try to maximise their profits out of you. A bird in hand is worth three in the bush. It is only after you have given them many jobs, then there will be an incentive for them to give more competitive quotes.

No, not with email proof we have of quantity of vendors keen to get reno.
they jump onboard quick smart, and already are expressing extreme interest in this concept. why wouldnt they? its work for them. paid jobs.
plus, reno company in on the profits.

the whole idea of buying a home, doing a reno, for quick sale, ummmm, that idea is now basically history. capital gains tax. buying property at a price too high,, blah blah, the list goes on.
why buy a property to renovate it, then sell it, with capital gains tax attached, when you can just pay the vendor to renovate.
suits both parties.
The Cherie Barbers etc, thats old method now.
thats why this is revolutionary. no need to actually buy the property. vendor already owns it. and vendor doesnt pay for the reno. we do. so its our risk.

 

[see_change]

My concern from your point of view would be the price going up , but not enough to give you profit or even cover the cost of the Reno .

The owners are happy as they have made more but ...

You'd need to be very experienced in your estimations of cost and increased value , and selective in which properties you take on .

Can you tell us more about your self . The concept sounds interesting , but do you have the knowledge and experience to make it work ?

Cliff

 

[pinkboy]

My concern from your point of view would be the price going up , but not enough to give you profit or even cover the cost of the Reno .

The owners are happy as they have made more but ...

You'd need to be very experienced in your estimations of cost and increased value , and selective in which properties you take on .

Can you tell us more about your self . The concept sounds interesting , but do you have the knowledge and experience to make it work ?

Cliff

Adding on from this, how many renos can you afford to have on the go at the same time? I mean, 5x $60k renos is $300k outlay (using your example a guide - that's a lot of cash to outlay as tradies will want their cut in 14 days, not wait the possible 6-12months before the place sells to get their share.

Im getting at, you must have a serious wad of cash to start with to get the concept off the ground, what's your BIO?

pinkboy

 

[Reno Funders]

My concern from your point of view would be the price going up , but not enough to give you profit or even cover the cost of the Reno .

The owners are happy as they have made more but ...

You'd need to be very experienced in your estimations of cost and increased value , and selective in which properties you take on .

Can you tell us more about your self . The concept sounds interesting , but do you have the knowledge and experience to make it work ?

Cliff

Hey Cliff

I have zero experience in industry. Only fundamentals Ive learnt.
I will be involved with a small team of experienced risk assessors.
They will do the market research.
eg, we wouldnt do this in a slow selling holiday region.

Its suited to city regions.
Even down to the right street.
All the right assessments are made.
If we think the property is a bad risk, a bad "stock" we wouldnt aim to renovate it.

keep in mind though, with permits, we can even enter any posh suburb, totally smash a house to pieces, and turn it into a celebrity heaven house.
we can do anything.
start on a 1.3 million property, and glam it up to 2 million
the sky is technically the limit, when you choose the right areas.
remember, we arent buying the home.
normally investors pay way over 500,000 to buy a home
most our reno jobs will be between 50,000 to 400,000. far less outlay than buying a home.
I kind of laugh at people talking about risk management, because those very people outlay over 800,000 to actually buy a place. massive outlay. what? thats not a risk?? you bet it is.

with the right teams, the right places, right areas, we can glam up any property.
add a granny flat if you want. total luxury.
sure, sometimes assessment team will get it wrong, reno wont achieve bigger margins. but in so many cases, we would even be rebuilding the entire home, so its actually a brand new home.

other jobs are more surface. paints, carpets, basins, benches, etc.
the goal is luxury though

smaller jobs will be city apartment, like $20,000 tidy up jobs. maybe lift it by just $35,000 in price.

the defining difference is, we didnt have to buy the home, then pay capital gains tax.
its the vendors home. and we simply find the funds for the vendor so the vendor doesnt even have to go searching for funds anymore.

 

[Reno Funders]

Adding on from this, how many renos can you afford to have on the go at the same time? I mean, 5x $60k renos is $300k outlay (using your example a guide - that's a lot of cash to outlay as tradies will want their cut in 14 days, not wait the possible 6-12months before the place sells to get their share.

Im getting at, you must have a serious wad of cash to start with to get the concept off the ground, what's your BIO?

pinkboy

as my post above, portfolio investors often but places over 500,000.
our reno costings are smaller than that.

we can have dozens of jobs going at the same time around the country.

$50,000
$100,000
$300,000
$50,000
$20,000
$80,000
etc etc
so whats that, say about $600,000, for a dozen jobs going at the same time.

reno company waiting for sale of property?
Umm, no. Reno company already gets paid by us. they dont wait for sale.
the reason they want a good job done though, is because we get them to do the other jobs too. they would have to even extend their team
the right reno company can actually become an empire off the back of this.
in the event of post sale profits, we kick a few extra incentives to the reno company. there are extremely strong incentives for reno company.
huge quanity of jobs for a start. = work= $$$$
we are already aware that one company will rise higher, thus become an empire off the back of this concept. who that company will rise to be, we dont know yet. the cream rises.

 

[Shaneelastic]

What about contributing to this forum as opposed to just flogging a service when you are a newbie. If your that successful at this strategy you'd be doing it yourself with your money simple

 

[pinkboy]

as my post above, portfolio investors often but places over 500,000.
our reno costings are smaller than that.

we can have dozens of jobs going at the same time around the country.

$50,000
$100,000
$300,000
$50,000
$20,000
$80,000
etc etc
so whats that, say about $600,000, for a dozen jobs going at the same time.

reno company waiting for sale of property?
Umm, no. Reno company already gets paid by us. they dont wait for sale.
the reason they want a good job done though, is because we get them to do the other jobs too. they would have to even extend their team
the right reno company can actually become an empire off the back of this.
in the event of post sale profits, we kick a few extra incentives to the reno company. there are extremely strong incentives for reno company.
huge quanity of jobs for a start. = work= $$$$
we are already aware that one company will rise higher, thus become an empire off the back of this concept. who that company will rise to be, we dont know yet. the cream rises.

So you have $600k cash to start with then?

pinkboy

 

[Reno Funders]

Investors will supply all the funds. far exceeding $600,000.

 

[Reno Funders]

What about contributing to this forum as opposed to just flogging a service when you are a newbie. If your that successful at this strategy you'd be doing it yourself with your money simple

Contribution is actually enormous.
New industry concept, and now you all know about it, and Im letting the right people on here take a slice of the pie.
cant think of a bigger contribution than that.

one day you can say, "hey, remember that nutjob who posted about his reno funders idea,seeking people to get onboard and take a slice,,, well thats everywhere now"

cheers.

 

[Ace in the Hole]

Good concept if it works.
Now it's exposed in some detail, you'll have a few watchers.
Once all the initial mistakes are paid for and experience learned from, what's to stop other's simply copying your model and dominating your market once the concept has been proven and market demand is there.

Do you have any protection over the concept?
Or do you simply want to get your share of the market while you can and not try protect intellectual property, if it's even possible at all?

 

[pinkboy]

Investors will supply all the funds. far exceeding $600,000.

So you bring the idea and no funds?

Now your general idea is out in the open, what's stopping a group of Somersoftarians or anyone creating this concept and leaving you out?

pinkboy

 

[MTR]

Hi China

1: No. this is a brand new idea and Im still setting up the website for it. (interested parties can contact me privately by the way, Im going to be offering 50% co-ownership of concept, for free, if I feel you are a good resource) (investors will be the funders).

2: No, we totally refuse to let vendor go backwards. If we spend 60,000, and the property start at 500,000, but was sold at 520,000. we dont make the vendor pay anything. vendor keeps the 520,000. zero payment to us. the only time the vendor pays, is when we send it into profit.

3: 3 real estate agents chosen by the vendor (to prevent rigging by us)(once again, to protect vendor. vendor is empowered)

4: Vendor holding out for higher offer?? GOOD. we want that. Higher the better. We spent a small fortune renovating, we NEED it to sell high. Our goal is to push vendors property as high as possible. Because that suits us, suits the reno company, and suits the vendor. win/win/win

My first question would be - how can you possibly stay in business with this model, you are the bank, and dependent on sale of a property at the right price/values come in at the right price? That's why no one is doing this, it would be financial suicide.

You have a couple of projects that go wrong, and it will be the owner who is at risk from the implications of this scenario, especially if you have a few on the go.

Personally, I would not be interested in this, I don't like the fact that I have no control over the project, budget blowout is one issue but blow out in timeframe is something that would hurt my pocket and of course too much risk here.

 

[Singo]

Basically this is flipping.

In the usual flipping, the investor gets all the profit, but have to pay costs when buying and then selling. And of course the Equity gain is taxed as well.

But in this model, if a PPOR is taken, that is lot of tax saving compared to normal flipping. End of the day, the renovation costs could come a lot with management fees and all. But money can be made in that Reno itself

But win/win situations can be easily achieved. Who is the bigger winner may depend on the arrangement of the whole process!

 

[turk]

Reno Funders

The first DD I would carry out on a scheme such as this, is who is Reno Funder.

Please tell us who you are and what your business experience is?

 

[Waldo]

A couple of questions...

Who gets to choose if an offer when selling is accepted? The vendor or the renovation company? If the vendor can choose any offer whats to stop someone doing a favourable sale to a friend/relative. You'd have spent $$$ on the property, then the vendor intentionally sells for the original price.

If the market is raising & it takes 2 months to complete the reno how do you determine the original value? The property may have increased more from the raising market than the actual reno. Likewise the same is true if the market is crashing.

At the end of the 6 month selling period (or 12 months for special circumstances as you have stated) what happens then? Is the vendor forced to sell (hence a fire sale & potentially low price?).

If the vendor has to pay for the reno + 20% of the equity increase (assuming it sells for a profit); why wouldn't the vendor just pay for the reno themselves & cut out the middle man? For 20% I'm sure the vendor could hire a couple of professionals to manage the reno/valuation estimate side of things. Better yet - could the vendor engage you guys, get the drawn up renovation plans/specifications, then back out & do the reno themselves? After all by that stage you've done all the due diligence, research on the market, ect.

Finally why limit yourself to people selling. If someone wants to employ your services with the intention of pulling out equity, why not? Vendor employs your services, get a valuation done, complete the reno, another valuation & vendor pulls out equity & pays for your services.

Sounds very risky as the reno company - very high risk for comparatively low returns. Remember that you'll be employing alot of people.

 

[Truly Exotic]

The problem I see with this model is

Lets use 400k house and if you over capitalize and spend 100k on a Reno and it sony worth 550k after Reno

And by agreement you have to sell at 550k which you get cash of 440k with your company only getting 10k

But at this point even though the vendor has got 40k more cash the opportunity cost of selling a proper does seem high
But I do see your point that the vendor has 40k more cash without doing much

 

[Reno Funders]

A couple of questions...

Who gets to choose if an offer when selling is accepted? The vendor or the renovation company? If the vendor can choose any offer whats to stop someone doing a favourable sale to a friend/relative. You'd have spent $$$ on the property, then the vendor intentionally sells for the original price.

If the market is raising & it takes 2 months to complete the reno how do you determine the original value? The property may have increased more from the raising market than the actual reno. Likewise the same is true if the market is crashing.

At the end of the 6 month selling period (or 12 months for special circumstances as you have stated) what happens then? Is the vendor forced to sell (hence a fire sale & potentially low price?).

If the vendor has to pay for the reno + 20% of the equity increase (assuming it sells for a profit); why wouldn't the vendor just pay for the reno themselves & cut out the middle man? For 20% I'm sure the vendor could hire a couple of professionals to manage the reno/valuation estimate side of things. Better yet - could the vendor engage you guys, get the drawn up renovation plans/specifications, then back out & do the reno themselves? After all by that stage you've done all the due diligence, research on the market, ect.

Finally why limit yourself to people selling. If someone wants to employ your services with the intention of pulling out equity, why not? Vendor employs your services, get a valuation done, complete the reno, another valuation & vendor pulls out equity & pays for your services.

Sounds very risky as the reno company - very high risk for comparatively low returns. Remember that you'll be employing alot of people.

The Vendor ISNT paying for the reno.
Thats the defining difference.
As it stands now, the only models available for the general public, is to go beg to a bank, go into even further debt to a bank(if the bank even lets you anyway), and then take a huge risk that the reno company doesnt even care about the job, or walks out on job too. NOW THATS FINANCIAL SUICIDE and the very problem we see today.

Our contract, signed by us, vendor, and real estate agent, protects vendor.
Plus, we are in bed with top reno companies.

The agent determines the sale at a quote of "offers and above" thats one of our clauses in contract. Agent must attempt to sell at near a certain mark, not just give it away to a friend.
Vendor knows this clause. There is zero fineprint in contract.

The agent is involved in the sale. The vendor cant sell privately. Thats our other clause. Has to use reputable real estate agent, local to the area of property.

 

[Reno Funders]

Also Waldo, we arent limiting ourselves to people selling.
Concept is open to people who arent even listed on market.
They get our website, see what we do, then consider our services.
We then assess vendors property, chit chat with reno company, assess if we can push into into saleable profit.
Vendor doesnt spend a cent. Sits back and watches home turn into total luxury.
Agent seals the deal, home sells at max return possible.
Vendor gets original value of home regardless, as determined by 3 agents chosen by vendor, pre-renovation.

 

[Reno Funders]

My first question would be - how can you possibly stay in business with this model, you are the bank, and dependent on sale of a property at the right price/values come in at the right price? That's why no one is doing this, it would be financial suicide.

You have a couple of projects that go wrong, and it will be the owner who is at risk from the implications of this scenario, especially if you have a few on the go.

Personally, I would not be interested in this, I don't like the fact that I have no control over the project, budget blowout is one issue but blow out in timeframe is something that would hurt my pocket and of course too much risk here.

Incorrect. We are more than just a mere bank. banks dont give a damn.
We are INTRICATELY involved with the renovation itself, and with the renovation company
Banks know bugger all about property renovation and its elaborate detail to push property into profit.

By the way, if you own a $1.5 million dollar home in Brighton, Melbourne.
Dont worry, we would probably bulldoze the whole house, if permits enabled us to, and build a $2.5 million home for Vendor.
Oh and whoops, we didnt pay capital gains tax. Umm, thanks for that.

 

[Reno Funders]

Budget blowouts our our problem, not the Vendors.
How much we spend, how much we provide a reno company, is our choice.
Whatever it takes to help maximise property return, is what we do.
That could even mean implementing all the latest technological power gadgets.
Futuristic homes.
Whatever suits the given suburb, styling is implemented, plus all the latest modern accessories.
Property will be dressed by a small and elite team of interior designers, who we choose when we need them. They are on call, so to speak.


Just a basic example, we are going to do a $90,000 renovation on an apartment, that would barely even sell for $400,000 anyway.
Some places might just get the basic $20,000 tidy up jobs, refresh, complete, leave, sell. If its lifted in price, we win, vendor wins.
If not, we count it as a loss.