welcome to my world

[grossreal]

Hi all
I will leave les or geoff to place this tread as I'm not sure were to put it.
I am going to keep this thread a live for some time.
It is to explain how you take a soup,( a problem site) make it into your project and turn it into a profit.

lots of people have asked If I would explain what and how I do business well this post will give you the ins and outs of how and what I do and this will be real site and real figures and for those budding property developers you may wish to learn. Post any question you wish the site is secured and no you can't buy into it and it will become self evident as the project evolves.
You will have to follow with me and may have to read a couple of times to understand,
This is not from any book this is my system and can work anywhere.

Let’s start
First you need a soup
This one was a broth
a site with a contract on it for 8 mil in 2003(remember 2003 as it is very important when looking at site as most that aren’t built now are in trouble)
Mr A takes an option on the site and throws 1.3 mil in to the site and takes to the land and environment court and wins (or he thinks he does)
The correction happens and the banks close in the reins and know he has problems that’s when people like me get involved (we are not sharks but are looking for soups).
Mr A goes to lots of lenders to no avail 3 months later
I offer to buy the site for 8.5 mil Mr A refuses.

The owners of the site have a bust up and then one of my real estate people ask do I want to have ago again.
This time I low low ball 6.7 mil(remember this site has a valuation of 10 mil)
This is by know 8 months this site has been kicked around by everyone and a couple of dogs.
The owners won’t accept so I go to town on the owners individually until one cracks at 6.840mil now we have a deal.
So we set up and new company and trust structure.
We get the valuer from a lenders panel to value the site as a gross realisation lend of 80% across the board on a 43 mil resale value.
And the same valuer to give me as raw site value.

Now for the pen work.
First the new company buys the two sites as individual sites 6,84 mil 80% 5.472 mil and I put up 1.368 mil short term money 2 months
then combine’s the site straight away and the da is carried by the land owners (so got the da for free) and refinance at the new value that I have already got in advance 10mil valuation 80% lend 8 mil I repay the 5.472 part (it’s the same lender so they give you 2.528 mil) I repay the 1.368 leaves 1.16 mil take out the short term interest 68k and you have 1.3 mil in the kitty to start the development.
I will explain the next chapter in this project.

I Am doing it in word and pasteing to read a bit easier and this is about 8 months of work at this stage

 

[wish-ga]

can you please space the paragraphs. It is very difficult to read. And with a long post increased readability will increase thread participation.

To gr and other posters please hit enter TWICE when you want to start a new paragraph. (gr - it may have lost the extra enters when bringing it over from Word)

Just realised the post took you 8 months - feel bad now

 

[WBG Redcliffe]

looking forward to the next chapter

wbg

 

[skater]

I have to say this, but I am lost. I really don't understand. You said that it was one site at the beginning, then half way through it becomes 2 sites. Did I miss something?

 

[grossreal]

hi skater.
It is currently two site and has a da as an amalgamated site.

The sellers are selling the site separate and we will be reamalgamating them and re issuing the da to the new company.
I have put some breaks in the the above to make it easier to read.

 

[geoffk]

I have a strange suspicion that you are in fact an absolute genius...


can't wait for the next chapter!!

 

[alexlee]

Brilliant stuff, Gross. Very much looking forward to the next chapter.
Alex

 

[grossreal]

hi
I have been called alot of things but thats not one of them.
I will do part two tonight and post soon its got a few things that are still dependents on others.
The project is in the evolution stage so there are alot of changes that take place as it evolves into the what I call a circular investment.
but that will be explained as we go thru the stages.
people have asked me to explain my system and does it work.
well you are going to see as I go stage by stage and unlike most ??
my part stops at construction as the builder takes over then.
I hope you enjoy and maybe learn if need be.

 

[grossreal]

hi all
For those interested in the end product and wish to learn more (this post is with regards to the mechanics of how the deal is done) you can go to jaffasoft.com.
this post is more for how its done and why its done that way
Please don't ask about size and prices etc ask those if need be to jaffasoft.
ask by all means why and how we did it this way or that.
and this is not an advertisement

 

[investor]

Hi

Nice Deal. A site for 6.8M with an end product worth 43M, 15% site cost is quite remarkable.

Where in Sydney did you find this site ?

I'm thinking for a 43M site, 1.3M will not get you very far at all.

Also what you have done so far is what all forumites are doing at the moment except you may have done it on larger hit than most. eg finding a ip with a price less than it's value.

Unfortunately you don't want to share in the figures and the details which is were the real brilliance lies.

For example :

Where is the site ? not exact address but roughly to give us an idea of resale values.

How did you arrive with resales of 43M ?
Plays a big role to see whether the site is a viable one.

Is the DA fully approved at this stage and what is the DA for exactly ?

Have you done an accurate feasability study ? Show us

What will the construction costs be including demolition, remediation and excavation, and what time frame are you expecting till the end of construction ?

What about borrowing costs for the duration of the development ?

What will be the cost of marketing, agents commissions and GST ?

As you said yourself the market is coming back at the moment hence the reason why you purchased the site less than in 2003.
In my opinion not a bargain but a natural correction in the price due to the market falling.
Hence by the end of the construction you may have to subtract 5% - 10% off your initial end product estimates due to this correction which is estimated to continue for a few years.

I can go on and on with questions I'd like to see answered in PART 2 but you get the picture.

Unless you are willing to show us WHY this was such a great site all you are doing is the same as the average Joe finding a Deceased Estate or a house sold at a fire sale due to a divorce settlement (2 partners breaking up as in your case).

I hope I haven't offended you, but the real brilliance in such a development comes in the nitty gritty, so please share


Regards

Investor

 

[redwing]

Hi GR

We get the valuer from a lenders panel to value the site as a gross realisation lend of 80% across the board on a 43 mil resale value.
And the same valuer to give me as raw site value.

Great Effort..



Redwing

 

[grossreal]

hi investor
this is for education so
I will copy your post and answer what we have at this stage
For example :

Where is the site arncliffe 1km from the international airport sydney ? not exact address but roughly to give us an idea of resale values.

How did you arrive with resales of 43M two valuation of end product from two different multinational real estate group ow have valued each unit ?
Plays a big role to see whether the site is a viable one you are right but this is not my first site and yes get it checked before you buy.

Is the DA fully approved at this stage and what is the DA for exactly 91 mixed units?

Have you done an accurate feasability study yes? Show us at this stage no but will put it up once this has evolved

What will the construction costs be including demolition, remediation and excavation, and what time frame are you expecting till the end of construction 17 mil and 15 month fixedx price contract and that will become evident is chapter 2 ?

What about borrowing costs for the duration of the development total grossrealisation lend (hence the name) and capitalised interest?

What will be the cost of marketing, agents commissions and GST this will also be evident in chapter 2 or 3 don't want to give to much away at this stage ?

As you said yourself the market is coming back at the moment hence the reason why you purchased the site less than in 2003 the reason is that this site had a problem that we got rid of hense the price.
In my opinion not a bargain but a natural correction in the price due to the market falling this is not here as a bargain its here to explain how you can do these deals.
Hence by the end of the construction you may have to subtract 5% - 10% off your initial end product estimates due to this correction which is estimated to continue for a few years you will understand by chapter 2 this is a little forward.

I can go on and on with questions I'd like to see answered in PART 2 but you get the picture.

Unless you are willing to show us WHY this was such a great site all you are doing is the same as the average Joe finding a Deceased Estate or a house sold at a fire sale due to a divorce settlement (2 partners breaking up as in your case) This may be like an average joe could do and yes they could as long as they can pull all the thread together and at the end of the day I class myself as an average joe, I just do these average joe projects as a living.
I am giving this not as a great deal others may have that opinion, I have alot better deals that won't get on a bulliten board but this is what is out there and to give those who say you can't find + properties in sydney these are all + properties all 91 .

I hope I haven't offended you, but the real brilliance in such a development comes in the nitty gritty and this bit is right but you will need to follow the chapters and the nitty gritty will be explained, so please share

 

[grossreal]

hi investor
I just read that you are in sydney
so you will drive near passed the front of this site everytime you go the international airport and you will see its construction while going there.
next door some of the tennants walk to the airport and no the aircraft don't fly over it I think.

 

[investor]

hi investor
I just read that you are in sydney
so you will drive near passed the front of this site everytime you go the international airport and you will see its construction while going there.
next door some of the tennants walk to the airport and no the aircraft don't fly over it I think.

Hi grossreal

Thanks for your reply. Answers alot of questions and gives me and everybody else a more clearer understanding and better grasp of the whole project which I think is a great one.

Good luck in this project and thanks once again for sharing the finer details.

By the way I think I know which one it is, it was advertised for a while and without giving too much away, is it 8 levels with 2 shops ?

If it is, 73K per site is an excellent purchase, well done.

Regards

Investor

 

[grossreal]

hi investor
There is alot more to this then just the price and will keep you informed.
I will do chapter 2 with in 2 weeks as I've got heaps still to do.
the complete investment will become evident as this evolves I have three of these and they will evolve in the same way this one is the easiest.
any question except location and da numbers I will answer.
this project is about 75% evolved but is changing daily.
and a project of this style and size will keep changing.
I will take questions but the next part will be 2 weeks at this stage.

 

[quoll]

Thanks grossreal,

This is looking like an interesting read. I'll keep a good eye on it as I think it will learn a lot from it.

Thank you

Cheers
quoll

 

[grossreal]

hi quoll
I hope so.
This is not my main project and that would take alot more the 2 chapters and this is only a very small part.
hope you enjoy

 

[grossreal]

hi all
I would like to take this opportunity to thank jaffasoft for there assistance and I don't have any financial connection with jaffasoft
but if you wish to see more about this project go to http://www.jaffasoft.com
join and go to developer hot insight and have a read for the more nitty gritty.

 

[grossreal]

Hi All
In the break of the Italian game.
So putting my time to good use.
I haven't had time to organise chapter two but hopefully it will be by this coming Friday.
I have a little bit of insight into my world this week and it’s not with this project but with another project but has bearing on this project.
I have put in an offer on a property and have a done a lot of work on it so far, we are at the verge of acceptance.
And the vendor swears down the phone and tells you to get ---- and don't ring him again. I continue and get my ground work done and that gives me another few days,
With the real estates, both mine and there solicitors writing off the deal.
Then Friday comes and the vendor asks the real estate for my Mobil ( the real estate rings and tells me ) I get on the phone before he rings me and asks has he cooled off (he must have or he wouldn't have been asking for my number) he is very apologetic about his bad language and that this project is taking its toll.
So I say this is a soup and you have been messed around but I am still running with this deal and am even further down the path to securing this property.
And told him that he is not the first and won't he the last that has told me to get ---- but that’s my job he had thought I had stopped and walked away.
The motto is
If you line ball a deal make sure that the price you give can stack up on your figures and then don't give up until the contracts ink is dry.
If you are going to line ball make sure you can take the heat that will follow.
And take command of the project.
The reason this soup is similar is that this soup has been on my table three times. And each time it has gone passed the swearing stage
and each time the ball has been dropped my price has come down.
To explain a quick time line of how these soups work for me is as follows
This is another soup
Property comm valuation 1 mil
I neg a deal for 650 owners say no
Go to auction price reached 640 reserves 650
Owners are an assoc (food association of nsw) has to go to meeting.
By the time they get back to highest bidder, lost interest they come to me not interested

Offer 500 owners no again
Owners send to auction again reserve 500
Same people turn up
Highest bid 450 knocked down below reserve go again to assoc meeting again same merry go round highest bidder lost interest.
Ask me again.
Again me no
Next at the general meeting of the assoc call is to put it to auction again.
I go to meeting and get them to vote there and then that I buy the building for 400k and is accepted and hand over 40k in cash at the meeting and show then the money before I ask them to vote.
so you have a 1 mil val property with a 70% 700k lend with a purchase of 400k and got a tenant in within 7 days of owning it on 38k 6%cpi index increase on a 5 x 5 lease and revalued and take equity out in cash.
Soups are very profitable you have to understand how to unlock then and solve the problem and investor says these are not rocket science and as you can see from above 400k is the normal price for a unit or a cheap house in Sydney and this comm is in Marrickville so it is inner west Sydney.
Working on soups you don’t need to do many each year to make it work.
I only have about a 25% strike rate and have a lot of costs and time that requires to be written off.
This post is more for people to understand soups.
And whether a soup is because of divorce, breakup, death, liquidation, money problems or in the case of the grand hotel internal fighting by lender (Australian bank), government officials and a construction company they all have a problem and they all have a key.
your job is to find that key.

 

[handyandy]

Hi All

Property comm valuation 1 mil
I neg a deal for 650 owners say no
Go to auction price reached 640 reserves 650
Owners are an assoc (food association of nsw) has to go to meeting.
By the time they get back to highest bidder, lost interest they come to me not interested

Offer 500 owners no again
Owners send to auction again reserve 500
Same people turn up
Highest bid 450 knocked down below reserve go again to assoc meeting again same merry go round highest bidder lost interest.
Ask me again.
Again me no
Next at the general meeting of the assoc call is to put it to auction again.
I go to meeting and get them to vote there and then that I buy the building for 400k and is accepted and hand over 40k in cash at the meeting and show then the money before I ask them to vote.
so you have a 1 mil val property with a 70% 700k lend with a purchase of 400k and got a tenant in within 7 days of owning it on 38k 6%cpi index increase on a 5 x 5 lease and revalued and take equity out in cash.
Soups are very profitable you have to understand how to unlock then and solve the problem and investor says these are not rocket science and as you can see from above 400k is the normal price for a unit or a cheap house in Sydney and this comm is in Marrickville so it is inner west Sydney.
Working on soups you don’t need to do many each year to make it work.
I only have about a 25% strike rate and have a lot of costs and time that requires to be written off.
This post is more for people to understand soups.
And whether a soup is because of divorce, breakup, death, liquidation, money problems or in the case of the grand hotel internal fighting by lender (Australian bank), government officials and a construction company they all have a problem and they all have a key.
your job is to find that key.

Hi Gross

What was your thinking when you turned it down after offering $650k why had you 'lost interest'. Just a strategy or had you had second thoughts?

Why was this a soup? Apart from the assoc bull***t!

Cheers