welcome to my world

[grossreal]

hi handy andy
Its a strategy when there is only two bidders and I'm one.
and the property has problems which this had and in fighting.
then it was going to go to a general meeting.
basically it had to.
There was infighting for 2 years and they were lossing money hand over fists.
something had to give and I happened to be there at the right time.
the problem was two fold 1 the infighting but two is that for an association. To take a hit and a loss it has to go to a general meeting and no purchaser is going to be invited to that meeting so you have to organise it so that it happens the way you want it to.
I had offered twice and was not going to offer again so I got the people with in the organisation that were negotiating with me to invite me and this they did.
soups have lots of different elaments some easier then others,
the really hard or complicated inter group fighting are the most profitable (in the case of the grand hotel profitable not in money or profit upfront but very profitably never the less).
why because if you have 4 groups fighting you will find 1 group that will be on your side.
use this group to gain the inside information needed.
loan amounts,
what the real problem is,
who is in control of the project,
what they will go down to,

I take it as a battle so who's allie and who's foe.
Then formulate an attack plan which will bring lots of different people with lots of different skills inc solicitor, brokers,real estate,accountant,programmers and the list goes on.
For this project the one for this original post has a group of 9 different companies all that have not got paid anything yet.
hope this helps to understand a bit about a soup.

 

[grossreal]

hi all
just a little side line I have organised with the assistance of jaffasoft to have a section that will have zipped mp3 files for people interested in this project.
I will put up a word doc part 2 here so people can read it or they can down load the zip and listen if thats better
This site will be doing all the pre sales also you do have to register and there is no cost
unfortunately you can't store here the first zipped file is 7.5 meg. and the second is 1 meg.
This is not going to change organising part 2 but with these soups they have more turns then a snake
And for the last 4 weeks we have been organising the vendors with the assistance of 2 solicitors and 1 barrister very interesting and that will be about part 4.
will come back soon

 

[rj]

Sorry gross - but I find reading your posts extremely difficult and confusing.

Good luck with it though.

RJ

 

[Glebe]

Geez Gross you're good. I'm buying a car soon, can I bring you with me to haggle the dealer!

 

[moosta]

i'm fascinated. thanks gr and please keep it rolling

 

[grossreal]

hi glebe and ramone_johnny
thats ok ramone_johnny.
at this stage its not a matter of luck
its are your numbers been right and if they are you win
and if there not you won't know until 2 years from now
and then you may have a problem
to date I haven't had a bad run and thats no indication that the same will continue
but for me its never luck
as dazzling says on so many times the devil is in the detail
and that you have done your numbers on your system
if that system has been right so far every time then thats not for me luck
thats structuring for success I adjust my figures to allow for market movements
most builders allow 5% contingenties for blow outs
I have allowed 7%, plus the builders has 5% in his figures so its a total 13%.
most valuers use one company to do market valuations
I have used 2 plus my own.
In this market there are alot of deal around but make sure that you are using a mind set of rules that you understand work.
example
you can walk into my office and think its a mess but I know where everything is and can find it very easilly
The same with these projects people look at them and think they are a mess
you must be able to untangle them quickly in your mind and work out can you achieve your set goals.
this post is for people to understand how these projects evolve.
and they are like a watch maker and he has a person with a handful of cogs and says this was a watch and is a mess know
and he takes that away and a couple of weeks later you have a working watch.
most people would throw that handfull of cogs in the bin and say to hard but not if it was an original rolex not me.
and you would get the same answer if you were the holder of the cogs and told the watch maker here they are and good luck?.
he would say the same as me this is not luck, this is skill and training and doing it for some considerable amount of time.

and last but not least most of the watch repairs are german or chinese ( from my dealing with them)and most are not very good at trying to understand,
so for those that wish to learn, I have no problem posting
if you wish to listern thats ok too (I find that the mp3 are easier to organise) but as in the part 1 this is not an easy project to do and most probably won't do a similar project but their are small ones similar are all over Australia and if you learn a bit all well and good.

This is not my largest project nor my most complex that one we are still working on.
if you want the mp3 they will only be on jaffasoft.com as he is zipping them and you can down load .
this is not to be seen as any critism of ramone_johnny,
this is just to explain that I don't work on luck neither should anyone else in investing I look at winning and success they are very different.
I looked at buying the casino in vanuatu not playing on its tables as I don't, haven't and have no interest in gambling
I have interest in the profit margins of casino companies
and glebe not a great negotiator with car yards there are so many cars that I generally go to auctions and check them out there.
haggling or negotiating is a skill and a very important skill at that.
the more you now about the product or person the more chance you have of winning the contest,
so find the car you want get prices from the ebays, carson line etc got o the dealler next door ask him what he's got better then this car and then go into battle.
my son wants a old mini 1000 in a dealer
we have been there 3 times now
it was at 4999
1st down to 4500
2nd down to 4250
3rd 4000 and last week end 3500 and we are going to test drive it
we may get it for 3250 yet
or walk away.

 

[aef]

Gross,

Thank you for posting with such detail.

I have learnt a lot in this thread and I appreciate the insight into how you structure your deals.

Keep it up!

Regards
A

 

[Peter Parker]

Sorry gross - but I find reading your posts extremely difficult and confusing.

But GR's posts are worth the effort

Here's some tips that could help:

1. With right mouse button copy the content of the post.

2. Paste it into Word Pad and play with it.

3. With liberal use of the space bar, breaking a sentence here and putting a comma there, you get something like this:

hi handy andy

Its a strategy when there is only two bidders and I'm one.

The property has problems which this had and in fighting as well.

Then it was going to go to a general meeting because basically it had to.

There was infighting for 2 years and they were lossing money hand over fists.

Something had to give and I happened to be there at the right time.

The problem was two fold:
* the infighting
* that for an association.

To take a hit and a loss it has to go to a general meeting. No purchaser is going to be invited to that meeting. So you have to organise it so that it happens the way you want it to.

I had offered twice and was not going to offer again. So I got the people with in the organisation that were negotiating with me to invite me and this they did.

Soups have lots of different elaments, some easier then others.

The really hard or complicated inter group fighting are the most profitable (in the case of the grand hotel profitable not in money or profit upfront but very profitably never the less).

Why because if you have 4 groups fighting you will find 1 group that will be on your side.

Use this group to gain the inside information needed. eg
* loan amounts,
* what the real problem is,
* who is in control of the project,
* what they will go down to,

I take it as a battle so who's allie and who's foe.

Then formulate an attack plan which will bring lots of different people with lots of different skills inc solicitor, brokers,real estate,accountant,programmers and the list goes on.

For this project the one for this original post has a group of 9 different companies all that have not got paid anything yet.

Hope this helps to understand a bit about a soup.

Consider the above exercise like a cheap 'trick & flick' reno but for phrases not properties.

99% of what is above is original.

The structure of a sound reno property is (or should be) sound. Just like the sequential logic of GR's post. Thus both are good bases to build upon with minimal work.

Any needed changes were cosmetic only.

Nothing substantial need be added. For instance, the kitchen did not need to be put into a bedroom and the last sentence did not need to go in the middle.

Like a reno that's cheap but stunning, the most benefit was through the creative use of existing and empty spaces (which cost nothing, unlike extending a roofline).

And in both cases the value added can be considerable

Peter

 

[grossreal]

hi Spiderman
well done
I never thought of it like that some very good lateral thinking.

 

[fernfurn]

Grossreal you have inspired me. My problem is small potatoes for you but you have inspired me to keep going when I had thrown it in the bin

Have had my eye on a block of land with a decrepit house on and approvals for two double storey units. Vendors are dreaming of prices way out of the ball park and I was waiting for reality to set in. Spoke to agent and said keep me informed but it went off the market. Has been on the market for approx 6-8 wks. Rang agent and he said vendors had refused 445 (I was thinking to make money, need to purchase at $400) and unrealistic vendors were thinking 485. I ventured, what about holding costs and interest rates going up? evidently vendors have plenty of money and aren't worried, but will not be developing it themselves
I feel the universe is telling me to hang in there, as we had a visit from a guy dropping off something and after chatting discovered his wife actually lived in that house as a girl. six degrees of seperation. would you belive it.
And now your post has revived my interest. Perhaps I should ring agent and say to keep me informed again, or track down the owners of the property myself. If you had any time for some thoughts I would really appreciate it

 

[grossreal]

hi celica
couple of things not all my projects are this size I am doing two sets of duplexes that were a soup in harrington waters and thats a very interesting senario that one but not in this post.
in answer to your question of what to do here is a quick run down of what I would do.
first find out as much about the vendors talk to neighbours council etc.
then get an agent that is in opposition to the agent that is selling the property get him/her to get a residex or rp data history on the site.
next find out any problems that are with the site if thats a problem get some one to get you probable problems, wink wink nudge nudge, then go to the real estate that gave you the residex info and tel him your offer and you don't want to deal with the agent selling it ( you are immune to his aftershave I Don't care give some reason) now you have the game.
your real estate will find the vendor(thats his or her job).
tell him her you will give 1% commission at one value and 1.5% at this value and make it a sliding rule down.
they are working for you.
make sure before you set the hound after the rabbit that you have all your pre work done that's
evaluation, fixed price contract, etc done

 

[fernfurn]

Thanks very much for taking the time to answer. I have another real estate agent I deal with in the area, so will take your advice and put him on it. First re has taken down his sign and said it is off the market, so that should be ok. I can think of a couple of reasons, position wise I could highlight as problems (I gather this is to justify making a lowball offer). By "make sure I have done my evaluation, fixed price contract, beforehand" do you mean with the r.e. or my own figures of whether I can make money? Do you mean so I can be serious and offer a deposit cheque if they accept.
I think it will take longer than this as they have refused 445 in the last couple of weeks so it will probably take a while for them to start to wonder what they are actually going to do about it. The house would need quite a bit of money spent to rent out.

 

[grossreal]

hi
Thanks very much for taking the time to answer( no problem). I have another real estate agent I deal with in the area, so will take your advice and put him on it. First re has taken down his sign and said it is off the market, so that should be ok. I can think of a couple of reasons, position wise I could highlight as problems (I gather this is to justify making a lowball offer). By "make sure I have done my evaluation, fixed price contract, beforehand" do you mean with the r.e. or my own figures of whether I can make money( your figures to make sure not only you can make money but an exit strtigy if your numbers are wrong)? Do you mean so I can be serious and offer a deposit cheque if they accept.
I think it will take longer than this as they have refused 445 in the last couple of weeks so it will probably take a while for them to start to wonder what they are actually going to do about it. The house would need quite a bit of money spent to rent out.

 

[grossreal]

hi all
sorry for the delay but here part two it is modified for reasons at this stage I will keep to myself.
I have deleted the money values at this stage and will fill them in at a later date they are in my copy put they don’t need to be up at this stage.
Chapter two
This whole project is not going to be short and as I said in chapter 1 this is an evolving project.
First to understand to solve a soup your need to get to the core of it and to do this you have to understand a few things.
1. the players in this game ( and I look at it as a game of chess but this is not a normal game of chess I have a three way chess set and play that with the boys but this is a multi player chess set and you have to move to what you think the others are going to do).
2. The boundaries of the project I.e. a start time that you are going to look at and were it is at that point in time.
3. the outstanding costs on the project
4. the vunerabities of the other player
5. as much history you can gain on your opponents
6. players out side the game that will influence the game(banks, creditors etc)
7. Any stumbling blocks that at this stage haven’t been move or can’t be moved at this stage for what ever reason.

To answer the above question and for you to get an idea of this project this chapter will be on the history of the site and from there you can see who the players are and why it became a soap.
In or around 2003 two owner were approached by Mr. A(I am not going to put names to this project as it does not assist and they may not wish to be named) came to them and offered to option there properties and to put the da into Rockdale council.
The price offered was( ) and the option fee was ( ) (now the option fee was 10% but the didn’t do the contract that way fault 1(I will put in the faults that is my interpretation and as this is my story I think I can))
Mr. A went and paid for the drawing and da cost around the ( ) mark and submitted them to council (councils can be real problems and if you are a council officer reading this then you can see it from my side of the fence).
Council knocked it back.
The drawings were done 5 times each time they were knocked back.
The clock was ticking and by about a year it was decided to take the project to the land and environment court (problem 2 fault 2 if you have not got the money or have not shored up your lend to construct which Mr. A didn’t)
After about 350k project comes out of L&E and now has a da but Mr. A has no money on top of that the goals have moved we are now 2005 and a corrected market.
Mr. A has been paying to hold this option with Mr. B and Mr. C and they have given him 6 option renewals to get thru L& E and the cost of the renewals is a total of( ).



Wait but there more
Mr. B and Mr. C both have lends on the sites with two banks and they have been holding the site also and they have paid in my calcs ( ) in holding cost and have ( ) from Mr. A so they are short by ( ). and the market is falling (banks don’t like this).
So Mr. A comes looking for finance and to get out of this deal so I put a syndicate together of investors to buy out the deal and run with it but Mr. A gets very greedy and what’s to large a share of the pie so the deal falls thru.
Mr. B starts to look for people to get him out of this deal not all just him.
Again it comes on my desk this is another 8 months latter.
But this time there is a couple of added players (in the form of two banks).
So to muddy the waters even more and to add heat.
I bring in a real estate to mediate the deal and his instructions are
That nobody knows who I am until I deposit the property.
I have all the history on the site and all the cost
by this stage Mr. A can’t get finance and Mr. B and Mr. C are on the ropes with a two bank beating the s—t out of them and about to liquidate.
I have a contract at ( ) I take the deposit out ( ) and take off 5% ( ) with an understanding to the real estate ( buyers agent if you wish ) that if they don’t accept that it comes down 5% per time they say no and they bring it to my desk.
Now we have a game.
We have Mr. A, Mr. B, and Mr. C (and two banks that want the site sold) playing one side and me, the agent, my bankers, on the other
We have the AAA in our hand and they have a site.
This is were it gets tricky you need to get the vendor working with you not against you and you need to find a player on the other team to assist you Mr. B was our player, he hated me swore down the phone and the names weren’t nice(the Italian used nicer words to the Frenchman) but he likes the agent so it good cop, bad cop I say this is what I want and I will tell the agent he goes back and changes a little with, I will accept this,
By this time it March 2006 three years latter from the start of this whole deal and Mr. B and Mr. C are at there wits end they want it sold so they agree to sell.
The next problem was the da as the da was held by the option holder this we need to get over but not let Mr B or mr C know that this is what we had in mind mr B an mr C brought in there own real estate mr D and he was the one that sold the site and set up the option for mr A this put a unknown quantity into the pot as he wanted to know who we were or nothing was going anywhere so we had stale mate if I told them who I was they would not have sold the site to me I had a hold deposit on the site with the buyer agent and had everything in place I had the lend organised so the next thing was the contracts.
Unless I told them who the buyers were (we had set up a new clean skin company and trust) not just the company.
So what do I do.
Simple let them stew for a while.





Then go and see mr D tell mr D that we have been told that we were buying this property and if the reason that you won’t sell this property is because you don’t like the buyer then the two bank will be informed and the price goes to ( )and also that we reserve the right to take legal action from our barrister that if then we still don’t buy the site we will take an action for break of a commercial contract as we had put a commercial deposit on the site with a view to purchase and this was all set out in a letter from form a barrister.
This brought all back to the negotiating table and know with the letter it told them who was buying the site.
This did not go down well and lots of calls later the contracts are with us I have posted the well after the contracts have arrived for security of the site reasons and that I won’t have time to do this size of word doc when I have this project at full steam so I have done this one and part three prior to full steam running ( like the chef with I made this one earlier).
Time frames and players
Labour content about 9 months of work 50hrs per week roughly
9 companies
Four solicitor groups
3 banks
Two valuation companies

Chapter three coming up

 

[MIZBUF]

Good read- G.R- I woulda played hard ball right from the start if Ihad been Mr A--Gone straight to L& I Court ater the 40 days (Not sure if that is still the rule) of Council not giving me a reply. I suspect these blokes are the sort who are always doin deals under the table- "I know a bloke in Council" etc sorta thing. They won't go near lawyers blah blah--till they are in a real mess then bleat about the costs- Now it has cost them-

 

[grossreal]

hi
hind sight is a great virtue but few have it.
Mr A is no fool and has been in the industry for a long time, some times these projects take a life of there own and you can't see the woods for the trees.
also in the 2003 time this was a market that is very similar to the perth market now a very heated market and it was not going to correct but it did.
yes it is requirement that the council must give you a reply on your da I have a couple of developers that lodge the l&e at the same time as they lodge the application for the da strathfield and ashfield are two that come to mind.
you can play hardball but its not cheap a l&E case is with a barrister and will set you back about 300k.
your
I suspect these blokes are the sort who are always doin deals under the table- "I know a bloke in Council" etc sorta thing. They won't go near lawyers blah blah
can be hell of a lot cheaper but I wouldn't stoop to that level.
this soups are not one problem they are a group of problems that come together to cause a problem and a very expensive problem when I am close to the final of these post and my involvement is close to the end and the project goes on without my involvement which will be soon I will come back to this post and add the costs that each has lost in real values.
The min is over a mil each.
so we are talk not only a big project but big losses also.

 

[grossreal]

hi all
havving a look you cant modify an old post so will repost with the values at a later date it will be part two but with the amount in the brackets

 

[harrywyborn]

Interesting read

Hi GR,

Thanks for the interesting post. As only a tadpole in the ocean compared to you, it is very interesting to see the mechanics behind larger deals. Now to apply those mechanics to grow into a well oiled machine is my next process.

I have bought, sold and renovated RE, now im looking to venture into the world of small time developing. With the ambition of building the knowledge and know how to become a successful developer.

I am currently working on figures for developing duplexes. Any advice on what to look out for would be very appreciated.

Regards.

 

[grossreal]

hiharrywyborn
as I posted before this is not the only project that I am doing at the moment and they are not all as big as this one.
I am doing 2 sets of duplex's with a builder which is about 80% complete and I am going to see them in 2 weeks I hope at this stage.
I think keep an eye on michael's post with regard to his development in nth shore and it will give you a bit of help.
with developing it is very similar to a paint artist
as in that every picture is different and so is every development and just like the principle of painting is simple
paint on a canvass, so is developing bricks or concrete on the ground.
and just like painting the better the quality the higher the price and the better picture is the same as the better designed building.
for someone to be trying on a forum to explain developing would take a very long post and I think it wouldn't be the same anyway as every site has lots of variables here are a few.
1. council ( they all have there own rules)
2. lay of the land and its problems.
3. access to and from the site
4. material being used to construct (and that alone is in its self a big problem)
etc
and thats but a very small part.
this post is to assist in solving problem site not how to develop them.
I am not a large fish in this market not even small fish.
I'm a fish that is swimming my own race and swimming very well at this stage.
I particularly aim on a very small and very niche market( all thou at this stage that niche is growing).
and specialise with a group to solve these projects problems.
some times they come off as I wish and some times they don't.
I hope you all learn something from this project.
there is a long way to go yet but unfortunately I can't get into developing here as well.
I will post the next part in about 3 weeks as I have a few things to organise and will be off the air most of that time I think unless I can get a sat nav access.
enjoy

 

[JoannaK]

Hi GR...

just reading the fin review the other day and I noticed an ad in the paper for a site in Arncliffe..

it says:

Prime residential development sites x 2

Lusty Street, North Arncliffe
2 adjoining sites - total 3665m2
close to wolli creek station
da approved for 89 residential units and 2 shops
in one line or as two separate sites.

expressions of interest...


Is this site that you've been working on for the last 8 months?