Those of you who have heard me speak at a seminar before will have probably heard me spoke off vendor finance or gold deals.

Deals where you have to put little or no cash in, in order to receive a nice, healthy profit at the end. I get opportunities for these kinds of deals all the time, it’s a matter of looking through the surface of the deal and getting creative about how you structure it and what the potential is. And one of the most important things is to avoid feeling greedy or wanting to get as much profit out of it and work with the vendor (person selling the property) to ensure that they get exactly what they need and want, if not more. When you walk into potential deals with this view point you will find more deals coming to fruition and paying the big bucks.

Today I came across a little beauty just like this so I thought I would tell you about it. A student of mine has a property that she bought at less that market value. However the way she structured her finances at the time was very rushed and ended up being a bit of a nightmare (this was before she studied my course!) so now she is in a position where she is paying ridiculous interest payments on the property even though she got a great deal on the price. She can’t afford to stay in and needs to sell to save her bacon. It’s a shame because the property is a potential development site and can be built into beautiful high-end apartments. And the location is golden, right on the beach – steps from the sand with gorgeous views, fantastic area, close to amenities and all that jazz. She has been talking to agents and other developers who want to buy and they are willing to pay slightly more than what she paid. This means she would have gone through the whole process without any real upside. She has already forked out on stamp duty, mortgage stamp duty, insurances, interest – she has cashed out quite a bit to end up with only a little more cash than what she paid. Especially when developing the property would give a 7.5 million profit.

So what can she do? This is where a Joint Venture would work beautifully. So we met up and I went over all the options with her. And this is where we came out.

If she does a JV with myself or another developer she can get the developer to buy the land for what she bought it for and thus pay out all her existing finance so she is no longer in financial strife. The property is worth half a mil more than what she paid, so I would not need any cash deposit to buy the land – I could get 100% finance. I will then develop the property and at the end give her a penthouse in the development valued at $1.5m. I will then make $6m profit for myself.

So she gets to handle her current financial situation immediately. She then gets a brand new state of the art penthouse right on the beach valued at $1.5m and built to her specifications for which she needs to put in no cash, build nothing, take no risk.

I get to buy the property for none of my own cash and still come out $6m on top. Sounds like a good deal to me! She comes out an absolute winner and so do I.

I have told some people about this deal and their opinion has been “why would you give her a 1.5m unit????” this is the wrong way to look at it. The comment should be “wow you got a $6m profit deal that cost you none of your own money!”.

Keep that in mind when negotiating and looking for deals, it will make you a better developer than most other people out there negotiating and you will start to get this golden deals falling into your lap.

Cheers,

Carly