Inner Bisbane is also like that,what i would like to know is what do you look for the stands out in the deal,is it the lease in place-which by what you are saying means stuff all anyway,,unles you have their backup funds for six months in place with legal letter to hand tyhose funds very quickly,, or the future redevelopment that you alone can see,but number one would have to be the total year by year money factor,,i know nothing about comm property deals only from i read from the experienced people in this site that have a firm understanding,every time i ring up about a local comm property within my investing area that has been sitting there vacant for over 9 months they never seems to want to give too much away let alone let me see the paperwork,maybe they just think i'm a ####head, when i miss some of the question they ask,would anyone have a rough idea what to ask,resi property is so simple- price- size- location,comm property is a whole different game to me,,and as there are very few books out there on that section of property investing,willair..
On the hunt again
- Thread starter Dazz
- Start date
Oh, please do kind sir. Come to Melbourne now; sweating ain't a problem here for the next five months so you'll smell nice.
We're laid back enough to excuse the absence of suit and tie and we want the content of the steak/sausage, not the sizzle of slick presenters.
You are most welcome here
+1 for Melbourne/Victoria.
Dazz...
1) eBooks aren't free. You charge for them - prices are anywhere from $4.95 to $99.95. and they don't have to be long - some are as little as 20 pages.
2) It wouldn't matter if you're playing with a billion dollars or matchsticks - the philosophy is the same - use other people's matchsticks to generate more of your own matchsticks.
3) comm is a very misunderstood game. i'm certain there are bigger players out there, but you're one of a minority few who are posting on this forum about it, indeed probably talking about it full stop.
4) simple things like "comm property is lease first, yield second, price third" is a possible little tidbit that could be expaned on easily.
5) i don't think you give yourself enough credit.
cheers.
1) eBooks aren't free. You charge for them - prices are anywhere from $4.95 to $99.95. and they don't have to be long - some are as little as 20 pages.
2) It wouldn't matter if you're playing with a billion dollars or matchsticks - the philosophy is the same - use other people's matchsticks to generate more of your own matchsticks.
3) comm is a very misunderstood game. i'm certain there are bigger players out there, but you're one of a minority few who are posting on this forum about it, indeed probably talking about it full stop.
4) simple things like "comm property is lease first, yield second, price third" is a possible little tidbit that could be expaned on easily.
5) i don't think you give yourself enough credit.
cheers.
hi will
there is no simple answer
because they are just to variable
with the 11 mil on the table at the moment its a 9.5% net net return in an area thats zoned comm but is gazetted to go multistorey comm and resi
so very big upsize
its not the questions that you need to ask its where you see the growth and whats in the lease
to do what you are asking would be a whole new section just on comm and the problem there is time
I for one just would not have that time.
the yeilds on comm pubs and hotels at the moment is around the 10 to 11% even investing direct into a fund is in the 12.5% net return
and I have group at the moment at investment into comm at 12.5%but these are stand alone entities
these are not the big players
these are 500 to 1 mil deals
the 11 mil will be a group take over at this stage
unless someone says heres 11 mil
aaron
first is price not their price your price(very different)
second lease ( and maybe a new lease)
third yeild
fourth upsize or as some say the twist of the deal
fifth deposit and quarantees
sixth any form of vendor finance involved
you need to understand why you want to buy this comm against another
and its not just comm real estate is comm businesses as well.
you have to understand the deal and then work out how to attack it
and they are all very different
thats not saying they are hard but they do need alot of time to make the deal tick.
there is no simple answer
because they are just to variable
with the 11 mil on the table at the moment its a 9.5% net net return in an area thats zoned comm but is gazetted to go multistorey comm and resi
so very big upsize
its not the questions that you need to ask its where you see the growth and whats in the lease
to do what you are asking would be a whole new section just on comm and the problem there is time
I for one just would not have that time.
the yeilds on comm pubs and hotels at the moment is around the 10 to 11% even investing direct into a fund is in the 12.5% net return
and I have group at the moment at investment into comm at 12.5%but these are stand alone entities
these are not the big players
these are 500 to 1 mil deals
the 11 mil will be a group take over at this stage
unless someone says heres 11 mil
aaron
first is price not their price your price(very different)
second lease ( and maybe a new lease)
third yeild
fourth upsize or as some say the twist of the deal
fifth deposit and quarantees
sixth any form of vendor finance involved
you need to understand why you want to buy this comm against another
and its not just comm real estate is comm businesses as well.
you have to understand the deal and then work out how to attack it
and they are all very different
thats not saying they are hard but they do need alot of time to make the deal tick.
Hi GR
The lease seems to be the only part of the deal
What sort of holes? Could you eleborate?
Cheers
Hi Grossreal
As per my previous post re leasers being able to terminate valid (or up to then) valid leases could you please eleborate.
TIA
hi dazz
aretill looking the southport is still on the table
its 11mil at 10% return with alot of upsize will need to have a 10 storey resi builder in the mix
will have to go back to see where they are at with it if interested by all means pm me
handy
it depends on the lease and how its drawn up
for me I have them that they have to put the property back to the same as they moved in
some don't
a lease can be broken it depends on the wording of the lease and there is no one size fits all
if a comm wants to leave you need them pay for as much as possible before they leave and adjust the property to bring in a new tennant
aretill looking the southport is still on the table
its 11mil at 10% return with alot of upsize will need to have a 10 storey resi builder in the mix
will have to go back to see where they are at with it if interested by all means pm me
handy
it depends on the lease and how its drawn up
for me I have them that they have to put the property back to the same as they moved in
some don't
a lease can be broken it depends on the wording of the lease and there is no one size fits all
if a comm wants to leave you need them pay for as much as possible before they leave and adjust the property to bring in a new tennant
OK, so that's the DD completed. Nothing untoward really, except a few recalitrant Tenants not paying their rent at all. What's a couple of bucks between friends. Nothing to stop the show.
Now into the hot and heavy negotiations. Should have the Contract of Sale signed by this time next week.
Their lawyers are still being silly buggers with ridiculous clauses. I decided to go over their heads and contact the head duck from the Vendor whom they take their instructions from. He agreed that it would be best for us to talk over the phone, or better still, sit around a table and thrash out the differences.....and once that's done hand it over to the dogs to finalise.
We are agreed on the price, and they are extremely keen to sell and we are very keen to buy.....so that's the big things out of the way. All the rest is minor fluff.
Still don't have any money however....that's the next hurdle.
Still don't have any money however....that's the next hurdle.
Got about $40 left in my wallet if it helps any. Deal me in.
+1 ...put me down for the ebook. There goes your first customer Dazz. Now wheres my book?
While im on the subject. Wheres yours aswell Aaron? I remember a certain someone saying they were doing a "development ebook" not too long ago. Again something id buy even though it was projected to be free?
+2
I'd be happy to read an e book from either Dazz or Aaron
Dazz, How does the hunt for a loan normally go in these situations, I think I remember you said the same thing about a previous purchase, that funding was the last thing you organised - is it a ball breaker for any particular reason, or just the normal and sometimes painful appllication process ?
It goes very poorly indeed jaycee. Everyone always says "gets stuffed", or if they are nice about it, they simply say "no".
It goes something like this.....
Day 0 to 50...Bank completely ignores you
Day 51.........Bank tells you that you are a very big risk (regardless of the deal)
Day 55.........Bank asks you what the entity name and address is....wha ??
Day 58.........Bank issues some nonsense highly conditional approval - worthless
Day 60.........Vendor says "what was the result champ ?? Are you ready to go unconditional ??"
Day 61.........Scratch and crawl around requesting an extension of time. Clacker hanging out.
Day 63.........Ask Bank what interest rate will be charged - get ignored again.
Day 70.........No news, other than the Bank's main decision maker has gone on holidays. Joy.
Day 71..........Bank's new assistant says "Now, sorry, what was your name again ??"
Day 75..........Bank thinks it's done a sterling job by issuing an approval which has 2 remaining sneaky little lawyer get out clauses. Still no dosh.
Day 76..........Vendor says "you are a joke...we can't believe we've wasted some much time on you"
Day 77...........Buyer wants to throttle all and sundry within arms reach.
Day 80...........Unconditional approval letter finally signed off, bereft of all of the pathetic little sneaky 'conditional upon' clauses.
Day 81...........Still no idea as to what the price of what you've just bought is....i.e. interest rate.
Day 85...........Bank insists that executed documents must be witnessed by a lawyer. Apparently we can't read.
Day 86...........Law firm says they cannot be exposed to that risk. Law firm's insurance lawyers say the Bank's lawyers cannot insist upon it.
Day 87...........Bank's lawyers insist upon it. Lawyer slopey shouldered circle jerk.
Day 88...........Deal of a lifetime rapidly going down the gurgler. Lawyers couldn't give a fig.
Day 89...........Call in 3 favours. Finally find some young clueless lawyer happy to accept the risk. $ 1,200 for 1 hour. Perhaps not completely clueless after all.
Day 90...........Scratch around like headless chooks trying to settle. Vendor's lawyer says there is a mistake on the paperwork. No F... doubt.
Settlement occurs
Day after settlement......swear to never buy another property unless you can pay cash for it and exclude the Bank process altogether.
3 days after settlement.....Bank writes to you advising what the interest rate is going to be. I guess the time for negotiation passed about 5 weeks ago. Pay whatever is written on the paper.
I love Banks.
Day 104 ... Buy next property, seek finance repeat the process from the beginning.
.....well, the negotiations have certainly been hot and heavy.....
It's taking way longer than I expected. Huge conglomerates are a pain in the @$$ to deal with. Everyone I'm dealing with is either ;
a) so bored stupid it isn't funny
b) nonchalant cos none of their money is on the line
c) on holidays
d) just about to go on holidays and couldn't give a rats
e) just back from holidays and completely clueless as to what is going on
f) not authorised to speak to me
g) not sure and will have to check and get back to me
h) just the commercial guy and not allowed to comment on the legal stuff
i) just the in-house legal guy and not allowed to comment on the commercial stuff
j) Only the solicitor. The senior solicitor handles those types of queries.
k) Only the senior solicitor and not able to comment. I'll seek instructions from Client..
l) Only the facility manager. All decisions are handled at HQ.
m) Only the operations manager. I'm not allowed to comment.
n) Only the State Manager. I'm not allowed to comment.
o) Only the assistant National Manager. I'm not allowed to comment.
p) The National Manager for Property Transactions. I can speak to you, but I don't make the decision.
We had a bit of a ding-dong there a couple of days ago. As usual, it was over a solicitor digging his heels in when he had no skin in the game. Had to go 5 levels over his head before the proverbial rained down on him before he'd back off.
Verbally agreed in principle all of the parameters with the bloke who could actually speak to me. Commercial guy. Big breakthrough.
Paperwork sent through. Legal side decides to get cute and changes 4 things to their advantage in the process. Need to spend 5 hours trawling through the document with a fine tooth comb to find them all.
Call up commercial guy and give him a blast. Words like "integrity" get thrown around like confetti. He apologises and says he's just the commercial guy and I'll have to take it up with the "in-house" legal guy.....but I'm not allowed to speak to him, and he's not authorised to speak with me ?? Now it's a double-tag team play. Roight !!
I don't know how many times in the past 2 weeks I've been told "I'm sorry, it's just we've got a certain way of doing things. We're a big company, I'm sure you understand."
"Ummm, no, I don't. Your 'certain way' involves iron-cladding yourself and letting the other party to the contract out to swing."
If it wasn't such a screaming bargain, I would have pulled the plug long ago. I've got better non-money type stuff to do in retirement than this malarkey.
"We understand that you have picked up the four changes we made, but the Board won't approve it without it being that way. Do you want to pull out ??"
Can you imagine Josephine saying that to Napolean on the gravy stroke and getting a positive answer ??
Current status now is the Contract has been signed by our side....and so now we sit and wait. This bit is always like the eye of the cyclone.
On the finance side, it's business as usual. Finance clause is going to run out in less than 2 weeks and we haven't even heard a peep from our Bank. We still have another week yet of the 'ignore phase' before we get the usual "Now what was the company name again ?" type query.
The only good thing to come out of the wash was that I negotiated to push both the settlement date and the finance deadline back another month. The Seller fortunately recognised and acknowledged that the Banks are totally useless and asleep. Not an ideal outcome with a property that is producing healthy positive returns....by definition you want that in your stable ASAP flinging off cash....but it's better than not having it in the stable at all.
So we wait.
It's taking way longer than I expected. Huge conglomerates are a pain in the @$$ to deal with. Everyone I'm dealing with is either ;
a) so bored stupid it isn't funny
b) nonchalant cos none of their money is on the line
c) on holidays
d) just about to go on holidays and couldn't give a rats
e) just back from holidays and completely clueless as to what is going on
f) not authorised to speak to me
g) not sure and will have to check and get back to me
h) just the commercial guy and not allowed to comment on the legal stuff
i) just the in-house legal guy and not allowed to comment on the commercial stuff
j) Only the solicitor. The senior solicitor handles those types of queries.
k) Only the senior solicitor and not able to comment. I'll seek instructions from Client..
l) Only the facility manager. All decisions are handled at HQ.
m) Only the operations manager. I'm not allowed to comment.
n) Only the State Manager. I'm not allowed to comment.
o) Only the assistant National Manager. I'm not allowed to comment.
p) The National Manager for Property Transactions. I can speak to you, but I don't make the decision.
We had a bit of a ding-dong there a couple of days ago. As usual, it was over a solicitor digging his heels in when he had no skin in the game. Had to go 5 levels over his head before the proverbial rained down on him before he'd back off.
Verbally agreed in principle all of the parameters with the bloke who could actually speak to me. Commercial guy. Big breakthrough.
Paperwork sent through. Legal side decides to get cute and changes 4 things to their advantage in the process. Need to spend 5 hours trawling through the document with a fine tooth comb to find them all.
Call up commercial guy and give him a blast. Words like "integrity" get thrown around like confetti. He apologises and says he's just the commercial guy and I'll have to take it up with the "in-house" legal guy.....but I'm not allowed to speak to him, and he's not authorised to speak with me ?? Now it's a double-tag team play. Roight !!
I don't know how many times in the past 2 weeks I've been told "I'm sorry, it's just we've got a certain way of doing things. We're a big company, I'm sure you understand."
"Ummm, no, I don't. Your 'certain way' involves iron-cladding yourself and letting the other party to the contract out to swing."
If it wasn't such a screaming bargain, I would have pulled the plug long ago. I've got better non-money type stuff to do in retirement than this malarkey.
"We understand that you have picked up the four changes we made, but the Board won't approve it without it being that way. Do you want to pull out ??"
Can you imagine Josephine saying that to Napolean on the gravy stroke and getting a positive answer ??
Current status now is the Contract has been signed by our side....and so now we sit and wait. This bit is always like the eye of the cyclone.
On the finance side, it's business as usual. Finance clause is going to run out in less than 2 weeks and we haven't even heard a peep from our Bank. We still have another week yet of the 'ignore phase' before we get the usual "Now what was the company name again ?" type query.
The only good thing to come out of the wash was that I negotiated to push both the settlement date and the finance deadline back another month. The Seller fortunately recognised and acknowledged that the Banks are totally useless and asleep. Not an ideal outcome with a property that is producing healthy positive returns....by definition you want that in your stable ASAP flinging off cash....but it's better than not having it in the stable at all.
So we wait.
Thanks for sharing, Dazz.
And you're too tall to have a Napoleon complex, anyway, Dazz.
Nah, but reckon Mrs Dazz would get away with saying whatever she wants.Dazz said:
And you're too tall to have a Napoleon complex, anyway, Dazz.
Dazz, I'm laughing my head off at the progressions you describe about the lawyers....and the Banks.
We have experienced pretty much the same over the years.
The Banks are one devil you have to deal with, but the lawyers are not so much.
What I've decided to do from here on in is do all my own document perusing and negotiating on clauses first (wouldn't attempt this at all without prior experiences) before going anywhere near the legal beagles.
Once I'm squared away and happy with the Contracts, then I'll bring the suits in to sign off.
From my experience, the lawyers are expert in "letter tennis". Now, my cynical mind would say that they do this on purpose to churn more dollars for them from the various parties' pockets.
As you have done; we have had to go straight to the Vendor over the heads of the doinks in the suits and get the deal done on two occasions now.
The purchase of our workshop cost $8k in suit fees, and in hindsight I could have easily done it all myself, and waive any clause to obtain legal advice.
Experience costs a lot of dough.
We have experienced pretty much the same over the years.
The Banks are one devil you have to deal with, but the lawyers are not so much.
What I've decided to do from here on in is do all my own document perusing and negotiating on clauses first (wouldn't attempt this at all without prior experiences) before going anywhere near the legal beagles.
Once I'm squared away and happy with the Contracts, then I'll bring the suits in to sign off.
From my experience, the lawyers are expert in "letter tennis". Now, my cynical mind would say that they do this on purpose to churn more dollars for them from the various parties' pockets.
As you have done; we have had to go straight to the Vendor over the heads of the doinks in the suits and get the deal done on two occasions now.
The purchase of our workshop cost $8k in suit fees, and in hindsight I could have easily done it all myself, and waive any clause to obtain legal advice.
Experience costs a lot of dough.
Agreed Experience does cost $$$ sometimes.
Also sounds like dazz going great. Always enjoy hearing his storys
Spoke to agents when handing them the signed contracts in duplicate.
They apologised for the "process" being so difficult, but gave me some comfort by saying that when the valuer was engaged by the Bank, they would be more than happy to show them a fully signed offer by a much larger mob, which was accepted by the Vendor back in Dec last year.
Their offer was a full 3 large ones less than what the Vendor had paid for the place 4 years ago. I don't think the Vendor overpaid 4 years ago, as they bought it on a 10% yield.
Their offer last Dec fell over due to lack of finance apparently...who knows....or maybe the place ain't worth a hill of beans ?? The way it's heading, my offer is very likely to fall over due to lack of finance as well. We've got the 35% plus closing costs in cash....but someone has to stump up the moolah for it to fly.
Time has weakened the Vendor's resolve, and during the ensuing 8 months hence, I have managed to negotiate our offer a further 1 large less again than what they accepted last Dec. If I was them, I'd be spewing....but it's a drop in the bucket for them and couldn't care less I gather.
Given that, I am therefore willing to put up with the harsh terms imposed by them. All going well, the contract terms won't matter. All going badly, my pooch is hooped. Nothing like a bit of risk to keep ya on yer toes.
What does that practically mean for a Bank reading all of this. Not a jot. They'll take the lower of the valuation and the purchase price.....so even if I have a small win, the Bank, naturally, will ignore it and take the lesser of the two.
They apologised for the "process" being so difficult, but gave me some comfort by saying that when the valuer was engaged by the Bank, they would be more than happy to show them a fully signed offer by a much larger mob, which was accepted by the Vendor back in Dec last year.
Their offer was a full 3 large ones less than what the Vendor had paid for the place 4 years ago. I don't think the Vendor overpaid 4 years ago, as they bought it on a 10% yield.
Their offer last Dec fell over due to lack of finance apparently...who knows....or maybe the place ain't worth a hill of beans ?? The way it's heading, my offer is very likely to fall over due to lack of finance as well. We've got the 35% plus closing costs in cash....but someone has to stump up the moolah for it to fly.
Time has weakened the Vendor's resolve, and during the ensuing 8 months hence, I have managed to negotiate our offer a further 1 large less again than what they accepted last Dec. If I was them, I'd be spewing....but it's a drop in the bucket for them and couldn't care less I gather.
Given that, I am therefore willing to put up with the harsh terms imposed by them. All going well, the contract terms won't matter. All going badly, my pooch is hooped. Nothing like a bit of risk to keep ya on yer toes.
What does that practically mean for a Bank reading all of this. Not a jot. They'll take the lower of the valuation and the purchase price.....so even if I have a small win, the Bank, naturally, will ignore it and take the lesser of the two.