Full Package Property Development And Investment For Sale

Business description

This is a once in a lifetime opportunity to acquire a business which has been built up over the last fifteen years by an experienced entrepreneur who has used his background as a solicitor to put together a business, uniquely situated to take advantage of taxation and other legislation, operating as a land developer on behalf of clients.

Operations:

The business operates from 8.30 a.m. to 5.00 p.m. weekdays and the owner devotes three hours to the business on Sundays.

Products / Services:

The business sources land, usually in the early stages of sub-division by companies as A.V. Jennings, Stockland, Australand and other private developers. Land is purchased only at wholesale prices with extended terms of settlement

The land is situated in the township of Casey and is within a ten minute drive of Berwick. This area has been deliberately selected as it is reported to be the fastest growing residential area in Victoria, and the land scarcity in the area is causing prices to be continuously on the rise. It is regarded by property experts as the “Toorak of the South East”. Depending on the financial terms available, blocks of land are bought in parcels as small as five properties, and as high as twenty, if delayed payment terms can be negotiated. Properties are never bought side by side and only in personally selected estates.

The company then advertises and sells home and land packages as soon as the block is legally definable. Fifteen different “copyright” house designs are offered, and the current owner selects which is the best design for the client after reviewing the client’s financial situation.

The company provides a full and detailed analysis of the client’s financial and tax situation, which is critical in the process to make the project self-funding for the client. Basic requirements for the client are equity of approximately $150,000 in his Primary Place of Residence and must be working and earning about $70,000 p.a. The client pays the company an amount of $1,000 on signing of the contract. The company arranges conveyancing for the land, signing of building contracts and loan arrangements, builder supervision, building handover, tenant selection, tenant supervision and rental guarentee.
The client has, therefore, for the sum of $1,000 secured an expert team to attend to all facets of developing the property and all ancillary requirements right through to the final delivery of the finished product.

Interest during construction is included in the costs and has nothing further to do, but the client is entitled to make inspections during construction. The company guarantees the best quality and best price in Melbourne/Australia, and when the house is completed, places advertisements for tenants with a panel of real estate agents, and has never failed to have tenants in place by completion date.

The company has steadily maintained Australian records in:
• lowest vacancy rates
• tenant occupancy duration

The company’s accountant organises ITWV’s and claims maximum tax deductions. This is all part of the service and included in the payment of $1,000. There are no extras for the investor client.

The company offers a rental guarantee of occupancy for eleven months in each of the first three years and has never experienced a vacancy rate in excess of 1.2%, with about 80% of first tenants remaining for those three years.

The company’s revenue streams are:

• An amount of $4,500 professional fees included and disclosed in the project costs.
• $2,000 commission on loan arrangements and thereafter, a trailing income.
• A commission of $20,000 payable by the builder on completion, which is included in the contract price, which is still below the competitive prices of other developers.
• The company attends to the final exterior work such as boundary and picket fencing, driveways and garden sheds, which is costed into the building contract at $20,000. The company makes a profit of between $1,500 and $2,000 on each property from this aspect of the development.

Activity over the last few years has been:

• 2006 43 houses sold
• 2007 36 houses sold
• 2008 29 houses sold
• 2009 40 houses budgeted

During the 2008 financial year the owner suffered health problems, which affected the business and which have prompted him to offer the business for sale. It is a once in a lifetime opportunity.

The owner believes that the current financial situation will benefit the business as money moves from the stock market into the more secure property market, which has a better risk and reward ratio. In addition, recent changes to legislation allowing the gearing of property investments by Self Managed Superannuation Funds will cause a major inflow of funds to the housing development and investment market, and the company is ideally poised to take advantage of this.

The owner has set up relationships with accountants, conveyancers and financial advisers to handle all detailed requirements to obtain the highest legally available tax minimisation on behalf of clients.

The owner has spent the last fifteen years developing and refining his systems and methods which are now in place and estimates the cost of this development at $500,000. His legal expertise was absolutely essential to the development of the package to its current level, but now that it is set up and operating, it is no longer essential that the owner of the business has a legal background. He will, nevertheless, agree if required to stay on working a three day week for a period of six months at a remuneration to be negotiated.

Premises:

The company currently operates out of an elaborate 2 story 6 bedroom home in Berwick built by the company, which can be rented if required.

Plant/Equipment / Fittings:

All office equipment, computers and filing systems are included in the price, and are valued at the owner at approximately $75,000.

Management / Staff:

The owner works approximately 60% of the week and his staff consists of:

• Administration assistant two days a week
• Mortgage broker
• Property and project manager
• Bookkeeper one day a week
• Sales representative who is paid on results

All staff are very dependable, and the owner has invested substantial time in training them and instilling a “can do, will do, will fit” attitude, and would probably all be prepared to continue their employment, if required.

To receive ADDITIONAL INFORMATION on this business, please contact Steve Lentin.

Property information

Real Estate:

Lease

Lease terms:

To be discussed

Living accommodation:

T

Location:

Currently run from home office.

Other information

Expansion potential:

Unlimited

Trading hours:

Monday to Friday

Furniture / Fixtures value:

$75,000 (included in the asking price)