Hi
Can someone please offer me some ideas on how to sell an option idea to a prospective vendor, i want to send out letters to property owners giving them an opportunity to sell there property on an option agreement, but i m stuck with putting the letter together without sounding dogie.
If anyone has some experience with this kind of deal, can you please help me out?Thanks
SeanSean,
I went to the Active Property Investing Meeting last night
and listened to a guest speaker who does these sort of deals all the time.He has a book called Prescription to Escape the 9 to 5 and a web site
by Gordon Ku cost $29.95
Knowledge is the key !.
Never stop LearningDuckster – any assistance on where you can find/buy the book? sounds like an interesting read.
Sean – not sure what sector or what size of deal you're looking to do, but generally speaking some things you may need to consider are:
* Option Fee. Deals for a dollar are rare indeed. Most vendors these days, in this market, will be looking for an option fee up front. Industry standard can be about 1% of option strike price, but if tis a larger lot for subdivision or the vendor is more knoweldgeable, you may be up for more.* End buyers. Well and good to get an option, but if you have no end buyers in mind, whats the point? Know who you're going to market to, and know also that tis something they're interested in. This is a very tough market for developers (generally) and they are picking the eyes out of the good stock, and anything that doesn't have a holding income or low risk is getting passed over (at least at the bigger end of town).
* DA – I know some spruikers out there will simply try (or tell you they can succeed doing so) and onsell the option with no DA at a higher price than the negotiated strike price. Think selling sizzle with no sausage. Doable? Sure. Recommended? Not in my opinion. Even going part way through the process will add more value to the option than no DA at all. Its only really viable if you can secure a 3year option and onsell factoring in capital growth.
*Demand for product. Work out what sites you're looking at, and what you can do with them, and if the market is hungry for it, either now, or will be around the end of your option time frame. Don't try and sell apples to a market that wants strawberries.
* Lastly, do your research. Not meaning to tell you how to suck eggs, don't know you or what you know either, but its something i see a lot of people failing to do, and paying the price for doing so, and this includes the people you deal with. Know your partners, know your market, and know your buyers.
Good luck with whatever you choose to do.
Cheers
Matt.Sage words Matt.
Here's a link to his website:
He's an ex orthopaedic surgeon. Seems like he's fin free thru property according to the stuff on his site.
I wonder if he still dons the knife out of choice/passion or whether he deals only in property now.
Hey mate! Good to see you Michael. Send me an email mate, got some new things I'm working with you might like.
Thanks for the link too!Cheers
Matt.The book can be got a his web site.
http://gordonku.com/get_the_book.htmlHi Sean
Would you be able to give us an idea of what you've got planned for these properties, i.e. are you looking to control them so you can get a DA in place for the property or are you looking to do back to back lease/options on residential property?
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
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