Thanks Dean you make it sound so simple I will just keep focused on putting in the offers,loads of them! What kind of discounts do you normally achieve when you are buying for +cashflow?
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Don't believe you can't buy at a discount
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Because I'm focused on cashflow only my rules are $50 a week pos cashflow pretax, so discount on valuation is very secondary for me. However most of my purchases in the last 12 months have been around 20% below valuation on the day.
However one property I paid $9000 above RV because it was returning $207 a week pos cashflow pretax!!
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Hi Dean,
Found the following "due diligence" clause from your past correspondence with me.
This agreement is conditional upon the purchaser approving (at the purchasers sole discretion) all matters that the purchaser considers may touch, concern or affect the property by (insert date) This condition is inserted for the benefit of the purchaser.
(I'm not too keen to use the valuation clause as I don't really need this information, and not too comfortable with the solicitor approval clause which seems a bit shaky as discussed in past threads.)
2. By having a date in this clause, does it automatically imply the offer becomes void if no counter offer is returned by this date? I intend to insert 5 working days (2 days to wait for counter offer and 3 days to do any due diligence) in this clause. How does it sound?
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1. Had a chat with my solicitor. He said the only way to use a due diligence clause is by putting "due diligence" into a clause.
Have you or anybody else used with success this or similar clause which has the "due diligence" effect without the unpleasant connotation carried by these words?
2. By having a date in this clause, does it automatically imply the offer becomes void if no counter offer is returned by this date? I intend to insert 5 working days (2 days to wait for counter offer and 3 days to do any due diligence) in this clause. How does it sound?
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By the way always remember that even though things are slowing down, most agents will have blinkers on for ages. I have several students saying that when they try to make low offers the agents say they couldn't possibly insult the vendor with such a low offer etc. This is drivel they trot out to try and condition you as the purchaser. You have to learn to ignore it. You can make any offer you like, it's up to the vendor to decide if it's reasonable or not.
Many properties I buy have had same owners for say 20 years. They may have bought the property for $25,000. The agent tells them it's worth $450,000 to get the listing. After 8 weeks no offers. You rock up with an offer of $325,000 as that's about where you need it to make the numbers work.
If you paid $25,000 and someone is offering you $325,000 and you're not strapped for cash, do you really care that the property is actually worth another $125,000.
I can tell you from personal experience, often the answer is no.
I'm just getting a multiple income property under contract that was on the market for 1.4 million. I contacted the agent, who I don't know at all, and said I was interested but felt the price was a tad high. I have a standard question I ask, "What would it really take to own it, do you think?" Right off the bat he gave me valuable info that the vendor was very flexible on price and didn't need the money. I think I'll end up with an agreement for under one million and the property is easily worth around 1.5.
Been on the market for ages and NO ONE HAS MADE AN OFFER. Now aint that a familiar song
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Hey Dean, your message of "just make the offers" really makes sense. I'm just wondering if all the people you're making offers to have already been classed as "motivated", or is there some other reason you're making an offer at all?
cheers,
Dave.You can find me at: Energise Web Design
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Hi Dave,
No I find out if they are motivated by making the offers. Obviously if you find out about a motivated vendor or have additional info gleaned from an agent then you can make an offer to suit.
I find my biggest challenge with new investors is getting them in the habit of trying to buy. Someone will say to me how hard it is to find a bargain and when I ask them how many properties they've tried to buy they often answer "1". They're discouraged because their only offer wasn't accepted.
Every one's looking for a magic formula. Unfortunately it comes cleverly disguised as hard work
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Hi Dean,
Every one's looking for a magic formula. Unfortunately it comes cleverly disguised as hard work
Referring to the "due diligence" clause in disguise, if multiple offers are accepted and you pick the best one, how do you say to the agents when prompted for reason of rejection? Thanks.Last edited by fudosan; 03-12-2005, 02:50 PM.
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Dean... surely that wasn't the one that was listed at $1.4m???You can find me at: Energise Web Design
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Huh, been working laste couple of days following Dean's advise... And what a hard work it is! Netting 1-2 offers a day, generally make 25 calls and end up having 4-5 conversations with agents. Some places are sold, others under offer (leaving them my number and short description of what i can do)...
Lots of ppl have been "insulted", I was called... Well, everything is very PC, of course!
I'm trying to turn these situation around and it helps getting much better infor about vendor, their situations and intentions...
It's definitely, definitely, definitely a very hard work, psychologycally demanding and one HAS to be very motivated to keep going...
Thanks for sharing your method, Dean, I can also see how I'm improving and evolving as a person through this tough experience...
So you say they are out there? Will keep digging then...Don't argue with idiots, they'll drag you down to their level and beat you with experience.
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Due Dilligence Clause
Dean,
Was also given this clause by Kathryn Barnes at Vallant Hooker & Partners.
"14.1 Completion of this contract by the purchaser is entirely conditional upon the purchaser approving (in the purchaser's sole and unfettered discretion) all matters that the purchaser considers may touch, concern or affect the property, the commercial viability of the transaction, Valuation, Construction of the building or any other factors the purchaser may deem necessary within ten (10) working days after the date of this agreement.
14.2 The parties acknowledge that the satisfaction of clause 14.1 shall be at the sole and absolute discretion of the purchaser and if the condition is not fulfilled due to the purchaser not being satisfied with any aspect of the property, the purchaser shall not be obliged to state any reasons for the lack of satisfaction."
I showed her the clause I was using..
"This agreement is conditional upon the purchaser approving (at the purchasers sole discretion)all matters that the purchaser considers may touch, concern or affect the property by XXX. This condition is inserted for the benefit of the purchaser."
...but she didn't seem to think it was totally adequate. ?
On a technical note, what program did you use to create your digitised signature? Do you just fax the offers off straight from your computer? I've tried copy/pasting clauses into page 7 of the S&P agreement but always have problems with the Copyright thingie in the middle jumping around.
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