Opportunity I cant complete due to finance

[VaSSagO]

I have found and done some preliminary due diligence on what I think is a great opportunity, however it is a bit out of my league at present finance wise. Was orignally thinking of a way to flip it without having to worry about financing the whole property but have given up on that.

Basically it involves purchasing a recently built residential complex in a great location (WA metro), splitting onto seperate titles and selling.

Targeted profit after costs (before tax) of ~$1 million (over 20% return), I have based this on discounted selling prices to allow for quick sales. Should easily be able to complete the project within a year. This is I beleive fairly low risk as the property is very cashflow positive (tenanted) meaning no holding costs and therefore easy to sell individually, no building or other works required. Complex already approved by the appropriate authorities, the current owner just never applied for strata titles.

So just putting it out there to see if this would be of interest to anyone here. If I can get some kind of finders fee out of it, that would be nice.

 

[Jake D]

So $5m down? BRB, calling the bank.

 

[tobe]

20% profit at that sort of capital level is pretty run of the mill Id suggest. In that sense, I dont like your chances of a finders fee......

 

[VaSSagO]

It is risk and reward. Sure you could buy a block, do a development and get a higher % profit but there is also higher risk with cost over runs, extended build times etc.

Don't forget this would require a lot less effort than a development, no organising builders etc, just apply for seperate titles.

This property is currently acheiving 10% net returns (before tax & interest), 15% gross. Being recently built it has good depreciation. So if held for a year it would be more 25% returns or could ask a higher selling price and get a higher return.

Anyway it is not for everyone, just one that i thought was a good opportunity.

 

[westminster]

Are we taking bets on what it is yet?
I think it's this complex in Joondalup

http://www.realestate.com.au/property-unitblock-wa-joondalup-113534075

I agree with the profit margin in so much I think they could sell for around $750k each however the market is very niche/targeted and I dont think you could sell more than one at a time or you'd flood your own market.

I'd be very careful about making sure it is properly approved by local council and eligible for seperate titles.

 

[VaSSagO]

Good bet Westminster!

From prelim due diligence looks like all ok re council approval and subdividing. Of course full due diligence would be required.

I was looking at looking at not marketing them direct to the public but other channels (not internet either).

 

[westminster]

I looked into my crystal ball - I have the deluxe version and it's very good at these things

 

[Blair007]

I have found and done some preliminary due diligence on what I think is a great opportunity, however it is a bit out of my league at present finance wise. Was orignally thinking of a way to flip it without having to worry about financing the whole property but have given up on that.

Basically it involves purchasing a recently built residential complex in a great location (WA metro), splitting onto seperate titles and selling.

Targeted profit after costs (before tax) of ~$1 million (over 20% return), I have based this on discounted selling prices to allow for quick sales. Should easily be able to complete the project within a year. This is I beleive fairly low risk as the property is very cashflow positive (tenanted) meaning no holding costs and therefore easy to sell individually, no building or other works required. Complex already approved by the appropriate authorities, the current owner just never applied for strata titles.

So just putting it out there to see if this would be of interest to anyone here. If I can get some kind of finders fee out of it, that would be nice.

Hey VaSSagO, do you know the reason for sale? if these numbers are what they are then the owner must really be in need of the money to not put them on separate titles personally?

 

[Waldo]

If it is the property Westminister posted it has been for sale for ages - they were chasing 5.9 about 6 months ago.

I think they are finding it hard to sell as it is student accomodation. I imagine this would make it hard to finance, management costs would be high, vacancy high over semester breaks & even maintenance would be elevated. A large facility like that with so many rooms would pretty much require a paid live in manager.

Same issues as all student accomodation really.