the 'seminar prophets

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From: Tom Siviou



I've been to the seminars, they beat the drum on how they or I can get me 20% discount or more from these nervous developers, buy for me at wholesale etc.

Well guess what, the projects I've found where I can get anywhere near that discount I don't want to own. I've found no meaningful discount or non at all on the projects that I really want, and they arent being marketed by property investment marketers either.

So, what is that 20% discount really worth ?. I'd say nothing.

In fact, if you look at the website of one of the most prominent prophets, whose regularly mentioned on here,
what properties are those they are selling ?, theres not much there of any great value.
 
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Reply: 1
From: Samantha Lind


Hi Tom,
You are quite right. But I think the lesson to be learned is don't put all your eggs in one basket ( don't rely on one strategy that has been preached by anyone). To get 20% discounts you need great buying power and on the right deal you might be able to get that here. And at the end of the day, if you are working on a cap. growth strategy - anything you buy today is tomorrows discount.
Sam
 
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Reply: 2
From: Ajit De Silva


Hi Tom,

Interesting! Are you speaking with the developers themselves?

Why wont they offer a wholesale discount, if you are buying several properties?

I'm assuming your referring to the K seminars.

Ajit
 
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Reply: 2.1
From: Dave :)


Hi Guys,

From my short but interesting experience in dealing with developers, I
can tell you they will never give you a real 20% discount. Even 10%,
regardless of what you may think, is rare as...especially if you're
talking about a property in a hot growth area.

The only time you'll 'think' you've got a 20% discount is in the
following hypothetical scenario.

* An apartment/townhouse development is just released onto the market
for off-the-plan sale.
* Looks just like the exclusive developments that are selling like hot
cakes in the 'in' suburbs.
* Location??..4 or 5 km's away from the development/suburb just
mentioned.
* Marketing angle? "Just like the _______ development in the suburb of
_______ but $5000 cheaper!"

The developer inflates the prices so that they are almost the same as
the prices of a similar development in a much better location. Then, he
is approached by 'graduates on a mission' who have just walked out of a
seminar and are intent on buying 4 properties with no money of their
own. Because he needs a certain percentage of pre-sales to obtain
finance for the construction, he will look at discounting. However,
this discount is off the already inflated prices. You may think you've
got a great deal when comparing to another development, but the reality
is all you've done is help the developer to obtaining finance for the
construction, by paying above market prices for the property.

If a development is at least 50% sold off, you have zero chance of
getting a 20% or even 10% discount...why would the developer do this if
their is sufficient demand for the product already?

It's important to know the market well, do your homework, look at
auction results, look at the supply in an area etc etc....you'll then
realise that you will NEVER get 20% discount on prime property in a
prime location, even if you were willing to buy them all yourself.

Call me stupid, but I'm sure that's the reality of it.

Cheers,

Dave
:)
 
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Reply: 1.1
From: Owen .


Samantha,

A quote to remember :

"Anything you buy today is tomorrows discount"

That is priceless and so true. Keep 'em coming.
 
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Reply: 2.1.1
From: Gee Cee Cee


Well Said Dave


Gee Cee
 
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Reply: 2.1.1.1
From: Tom Siviou




hi guys, some good thoughts here. sam that line about todays buy being tomorrows discount, so true. and everything should be about cap growth. i mean really, who can get excited about 4.5% yield or even 7, it barely pays the costs. Hi ajit, i deal with whoever is selling it, developers, real estate agents, but i wont touch it if theres a marketer involved. I know their comms are huge. And dave, i think from what you are saying, is its best to get in early if project finance is a consideration for a developer. yes i agree. But your homework can only help you if its comparable, there are so many new developments today that are unique. you can't compare a new development to a 60's flat. this is where our skill and vision comes in people. you will find there are new developments being retailed at prices well below what their potential would suggest.
 
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Reply: 2.1.1.1.1
From: Ajit De Silva


G'day Tom,

Sorry for the late reply. I think what both you and Dave have make alot of sense. David I agree, with your point about possibly getting a discount when buying multiple ip's to get the developer across the line for building finance.

I do have another notion that buying in a hot spot, wihtout a discount, could still see you in front, given a high level of demand for the property purchased.

This goes in to your point Tom..that its capital growth we would then be relying on.

Couldn't you trade that property in before settlement?

Just a thought. Any opinions from the floor.

Ajit
 
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