05/11/2021
I love my job. I often catch myself wondering:
'why didn’t I start this business sooner?'
But I also know that the journey to get me to this point (which has included being a lawyer and a property investor for some 20 years) has been just as important and has given me skills and tools in my 'business belt' today that make all the difference to our clients’ outcomes.
I immerse myself in my work daily that I do not (often enough) celebrate the wins and the extraordinary team of people around me who help me to cultivate and secure these wins for our clients.
Here is an example that is only days old.
This is the story of how we helped M and J secure their first investment property in Sydney in just over 24 hours from the first open home inspection.
The story starts with a very switched on young couple who were recently married and have just started their family. I love it when young couples are thinking about their financial future. Their son is only 5 months old but they have already started working on their plan for his future and their own financial freedom goals. Win!
M and J came to us with clear goals in place. That was a great start. But we have also helped many clients who haven’t had the same level of clarity but just know they want to invest in property.
We did the necessary prep work with M and J to make sure they had their pre-approval in place and understood their purchasing structure and criteria. Having a mortgage broker and financial advisor on our team gives our clients the advantage they need to be prepped ahead of any purchase. We also work with any professional already part of our clients’ team.
For The Buyer researched a number of properties currently on and off market and found for M and J what appeared to be a real gem:
• A 1950’s home (it was nothing much to look at!)
• Renovated on the inside and definitely in good condition to rent ‘as is’
• Sitting on a good sized block of land in Sydney with an ‘R4’ high density zoning (you can build 6 storey high apartments here if you meet the minimum site requirements)
• A great site to achieve multiple income streams on the property (deploying this cash flow strategy, the property will be positively geared for the client within 7 months).
The property ticks the boxes in that it promises significant capital growth over time and gives our clients multiple exit strategies, while simultaneously delivering positive cash flow.
The one problem was it had just been listed for auction. The first open home was tomorrow (a Saturday). The auction was weeks away…
I knew the Vendor’s agent. When he says ‘auction’, he means ‘auction’. He will not entertain offers ahead of time.
Most of my clients are not interested in attending auctions. Understandably, they don’t want to compete against a swarm of other purchasers who end up emotionally bidding on (and often overpaying for) a property that should, as an investment, be a very clinical decision. The numbers either stack up or they don’t.
And yes, for those of you wondering, you CAN secure property in Sydney even in this ‘hot’ market without attending an auction. That’s exactly what we did here just days ago! Read on!
The first hurdle was convincing the Vendor’s agent to accept an offer ahead of the auction. We worked out his pain point and were able to ensure we gave him the certainty he needed to allow us to put an offer in. The entire strategy depended on securing the deal from 10am on the Saturday (when the first open home was scheduled) to 5pm the following day (Sunday).
To make that happen, our team went into over-drive to:
- assess the development fundamentals of the property before the first open home (we don’t even bother with an inspection unless this checks out)
- We turned up to the 10am Saturday inspection with our trusty Pest & Building Inspector in tow. He gave the clients the ‘green light’;
- we briefed our trusty solicitor Saturday afternoon. She delivered her contract advice overnight and met with our clients Sunday morning to give them the ‘low down’.
- Meanwhile, we were having discussions with the Vendor’s Agent, trying to work out the right price (the psychology of reading the cues and pitching an offer is where the real fun begins).
- we crafted a written offer that got rid of the contractual nasties there and then and protected our client’s rights to a cooling off period so they could conduct a proper due diligence.
Just pause here for a moment.
As a lawyer myself, I am astounded at the number of people who surrender this fundamental protection. It seems to be a negotiation tactic to beat the competition: “Hey! I’ll give you the money you want and waive my rights at the same time!”. That’s not clever negotiation. That’s just foolish.
Great for the Vendor. Potentially disastrous for you (especially now with the tightening of the lending rules). Never do it. Your pre-approval is never a forgone conclusion and the property may have latent or other issues that can be discovered on a proper due diligence. It can make and break the economics of a site.
Just saying.
Anyway, back to M and J.
We crafted an offer that preserved M and J’s rights to a proper due diligence but still gave the Vendors what they wanted (the certainty to proceed to auction and the next open home unaffected if we pulled out). The offer was also pitched in such a way that it made the Vendor’s agent want to work for us and get the deal done. If he pulled off this deal, he would get his commission with minimal work and look like a hero to his client (not to mention the spin off publicity he would generate – “Sold in 1 day!”). Win! Win! Win!
Our trusty team had the deal sealed and secured by Sunday afternoon. Contracts were exchanged. My clients were now in the driver’s seat.
From there, it was easy to arrange for the necessary checks to be undertaken to ensure the site and numbers stacked up. Which they did. Onwards and upwards as we now track to settlement and fast-track the value-add build for our clients. 🤩🤩
