Forums / Getting Technical / Finance / Private Equity/Business Angel

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  • Profile photo of hoarelhoarel
    Participant
    @hoarel
    Join Date: 2003
    Post Count: 39

    Has anyone ever tried to get private equity for a land subdivision. Would be interested to hear anyones thoughts on this subject. EG where to look for private investors. Any problems, was it worth it?

    Thanks

    Luke…

    Profile photo of kylesbmkylesbm
    Member
    @kylesbm
    Join Date: 2003
    Post Count: 8

    The is a few different answers to your question.

    Firstly, Yes, however this is generally done on large subdivisions, with many private investors. This is how a lot of developers/companies fund there operations. Hold many seminars, show the investors the figures/returns and securities.
    Yes it works, and very well.

    Secondly, yes, but with close friends and realatives, they had the land/funds, I had the time and know-how. Yes it worked, no problems.

    However, to give you the answer you are looking for,(I think), your best shot would be either ask a developer or builder for a joint venture. Then I would try a real estate agent to see if they knew anyone. Then I would advertise for a joint venture partner or investors. Then join a developers group and meet other developers, who may be interested. Depending on size of project.

    In regards to problems, you should have no problems as long as all the terms are set out clearly from the start. Its a win/win situation.

    Do you have land to subdivide?
    What is the size of the land?
    What is your expected yield?
    What is the blocks selling for?
    What amount of funds are you looking for?

    [email protected]

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    Luke,

    I have brokered these deals in the past.

    If you would like some assistance please contact me by email.

    Cheers,

    Simon Macks
    Mortgage Broker
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,749

    Hi kylesbm,

    Great post and advice!

    Thanks for lending your opinion and welcome to the posting community. Hope to read more from you in the future.

    Warm regards,

    Steve McKnight

    **********
    Remember that success comes from doing things differently.
    **********

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Still in SchoolStill in School
    Member
    @still-in-school
    Join Date: 2003
    Post Count: 1,844

    Hey Steve McKnight,

    whats ya doing, your taking over your forum board, every post written is posted by you.

    lol, whats happening????????

    cheers
    s.i.s

    “People 4 get that by saving just $3 aday & investing it sensibly over a working life, you’ll end up wit around $1 million.”

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,749

    [:D]

    A private plot to take over the world

    <<sinister laugh>>

    [:0)]

    Nearly bed time for this fella…

    Hey, nice sentiment with the saving idea (another post somewhere), but just watch out for the impact of inflation.

    Steve McKnight

    **********
    Remember that success comes from doing things differently.
    **********

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Still in SchoolStill in School
    Member
    @still-in-school
    Join Date: 2003
    Post Count: 1,844

    Hey Steve,

    lol, dont worry taking that all into consideration, though if you click on my signature, i have it linked out to a website that caculates, when you will become a millionaire, at how many consistent dollars you save and at an applicable interest rate return. though it does not take inflation into consideration.

    cheers
    s.i.s

    “People 4 get that by saving just $3 aday & investing it sensibly over a working life, you’ll end up wit around $1 million.”

    Profile photo of hoarelhoarel
    Participant
    @hoarel
    Join Date: 2003
    Post Count: 39

    Hi All,

    Thanks for th replies, I have been away from a computer for a few days and just got a chance to log back on the web. Anyway to answer some questions:

    The land area is 800 acres. It is relatively close to a capital city and should sell easily to “lifestyle buyers”. It has preapproval from the council for an 8×100 acre lot subdivision after a few conditions are meet. EG power and phone connected to each lot, drive entrance etc. Prices for the blocks are currently $250K plus each. The catch to this is the farmer who owns it would rather sell as a whole for about 1-1.1 million. If you could sell 8 lots at the minimum of $250K that is 2 million by my calculations. I know the connections and development would cost a bit, but I would be sure you would be left with a sizable chunk of change after the development.

    The interest for me is I would like to buy part of the land, probably 2 lots. If someone would like to fund most of the money (I only have about $50,000) then I would be interested in buying 2 lots at cost and the rest of the windfall would fall to the lender of the money.

    Profile photo of kylesbmkylesbm
    Member
    @kylesbm
    Join Date: 2003
    Post Count: 8

    Thanks for the kind words, Steve.

    I am intersted in all options.

    Need further information

    please contact me by email

    [email protected]

    Profile photo of PersiusPersius
    Member
    @persius
    Join Date: 2003
    Post Count: 18

    Greetings Luke

    I’d be happy to organise the money re your 800 acres depending on the answers to a couple of questions, so will need further information. Please e-mail me: ntashkoff at vtown.com.au with your contact details and I’ll give you a call.

    Cheers

    Nic

    Profile photo of kylesbmkylesbm
    Member
    @kylesbm
    Join Date: 2003
    Post Count: 8

    FamilyFirst

    Maybe we should get together, in regards to other deals. Can’t excatly say here as it will be deemed as advertising, I suspect.

    [email protected]

    Profile photo of PersiusPersius
    Member
    @persius
    Join Date: 2003
    Post Count: 18

    G’day Kylesbm

    Sent you an e-mail yesterday re your last post.

    Cheers

    Nic

    Profile photo of kylesbmkylesbm
    Member
    @kylesbm
    Join Date: 2003
    Post Count: 8

    Familyfirst

    I didn’t receive it.
    Could you please send again.

    [email protected]

    Profile photo of monkey_boymonkey_boy
    Member
    @monkey_boy
    Join Date: 2004
    Post Count: 3

    No offense and no malice meant to any of the moderators or administrators or posters, but how does one tell the difference between advertising (Re: susan or money parter), and ‘requests for private equity’? [?]

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    Hoarel

    I don’t mean to be negative but can i just openly crunch some figures with you aload.

    Purchase Price – Assume $1.1 Million

    Costs of Subdivision – $360K (will vary from Council to Council but based on our last Land Subdivision in Brisbane) includes surveyors, engineers, Council Application, Headworks & Parklands contributions etc.

    Marketing & Sales – $75,000

    GST on Margin – $60,000

    Approximate Total -$1,595,000

    Less Gross Sales – $2,000,000

    Profit available for distrubution – $405,000
    Represents 25% RTC

    This ignores holding costs and the fact that 2 of the lots would be sold to you at Cost plus $1.

    Not sure what everyone else would expect but i wouldn’t do a Land Subdivision that will take over a year from Start to finish with only a 25% return.

    Cheers Richard
    richard at fhog.com.au
    http://www.fhog.com.au

    There is no such thing as a problem.
    Just a solution waiting to be found

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of AdministratorAdministrator
    Keymaster
    @piadmin
    Join Date: 2013
    Post Count: 3,225

    Luke, you sure don’t have a lot of money to put in.

    Yet …………., it may be possible with a bit of imagination and a lot of hard work. Easy ? Definitely not.

    If you are absolutely convinced that the blocks can be readily be sold I would approach the owner and ask for an option so that you control the land and obtain some time to do what you need to do (i.e. find a couple of buyers and also get time to apply for council approval to stage the subdivision).

    You tell us that council has approved in principle so all that is required is to put a proper plan in designed by a surveyor and to put some of the services in.

    Go and see a surveyor ans ask him to quote you on drawing up a plan of subdivision and also ask his opinion as to what the services would cost to put in.

    Presumably some of the blocks do already front the road and therefore it wouldn’t cost a lot to reach the stage where you can sell these particular blocks.

    Put in an amended D.A. which allows you to do the development in two or three stages. This will allow you to subdivide off the easy blocks (those which have a road frontage at present already).

    Advertise and look for two or three buyers, ask them to release the deposit to your solicitor (and such deposit to be released to you upon certain works having been completed) and in return give the buyers ample time to settle.

    Once you’ve got 2 or 3 buyers signed up it looks like it will be a formality to complete the deal by obtaining finance to carry out the required work so you can settle with these buyers.

    A proven formula. sounds easy doesn’t it ?

    I doubt however that it will as easy as it sounds with so little money and no experience.

    As Richard appears to indicate, you wouldn’t be leaving enough in the deal for a finance partner to come in on the deal so forget about you taking two of the blocks at cost price (for the time being – after four blocks have been sold you may conceivably divide the 4 remaining blocks between you and your finance partner).

    I would also suggest, after you’ve got a better idea of the development costs involved, to find out whether you are able to obtain finance to hold two blocks (in other words, are you able to service the loan ?).

    (If it was easy everyone would be rich.)

    Pisces133

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