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Armed with the information she was given in the
literature we all had read as a group of friends all those years
ago, she had suddenly seen the light and answers were present where
once there were only questions.
The following formula struck home with Jennifer.
problem + solution = profit
She had a few thousand saved, however the help
she got from her parents was helpful even if it did work out that
had she not received the help she still would have achieved the same
results. Her parents offered to put the family home up as equity
against the property deal she had found and it was a beauty.
Jennifer immediately began scouting for a deal at
the local real estate agents and brokerage houses. She used the
internet extensively and after a few weeks of hard work could not
find what she had envisaged. A property with problems that could
easily be fixed for a profit. At a family gathering she relayed that
information to her brother Andrew who encouraged her and gave her
more inspiration to keep looking. That night she was on the internet
again and she was suddenly inspired to make a wider search for more
expensive properties as previously she had been looking at
properties for under $200,000
Her new search included houses under $1 million.
There it was, asking price $520,000 She made her calls to
investigate her due diligence questions and the results were
interesting. The building was a large 52 room boarding house that
was unused. An older lady lived there by her self and was looking to
sell it so she could re-locate closer to her family.
Jennifer made an offer on the property the
following day after inspecting it and traveling back home to talk to
Andrew and crunch the numbers. She found the building to be in good
condition, if a little run down, the foundations seemed solid. Her
idea was to access the excess intrinsic value in the property by
getting subdivision certificates for each and every room of the
building. Her plan was to have the place painted and minor repairs
taken out on the roof and exterior.
Her offer was for full price asked providing the
deposit was only $3000 and the escrow was 4 months or 160 days. The
vendor was in more of a hurry, but without much other competition
for this building she eventually accepted the terms.
Jennifer also negotiated immediate access to the
property so the work could begin on her investment. She had never
picked up a paint brush in her life, but she was motivated and ready
to learn by trial and error. With the help of family and some
professional help on the big jobs, she completed all she envisaged
within 55 days into the escrow period. The condo certificates had
been applied for and were slowly starting to filter through. As soon
as the first few came in she had an agent appraise the newly created
studio apartments and immediately had them listed. The agents
confident opinion was that each was worth between $30,000 and
$40,000!
By the time escrow had come and settlement was to
take place, she had 15 contracts in place. In other words she had
already sold 15 of the 52 trendy studio apartments she had created.
With this equity, she didn't need to use her parents equity in their
family home to secure the finance required. Her existing sales
totaled $612,542 which exceeded the purchase price of the boarding
house.
Bank managers were tripping over themselves to
offer the finance for this deal despite the fact that she had no
long term work history or any immediate access to cash. The equity
added up in their books and they didn't need any further security.
Of course the best part was still to come. She
was the proud owner of the remaining 47 apartments which were now
owned by her free and clear. The total value of those studio's were
in the vicinity of $1 and a half million dollars.
But that wasn't the end of the story. She was now
ready and capable of adding even more value. She noticed a large
percentage of the people looking at the apartments were actually
investors and not people wanting to inhabit the studio's so she
employed a property manager to fill the existing vacancies of this
building. This was another increase in value because with an
existing tenant paying a lease the apartment was now an investment
ready made package. Just what these potential investor wanted and
needed to secure their own finances.
By doing so, she added even more value so her
final calculated return after all costs was nearly $2 million before
tax. She sold the last apartment nearly to the day of a year after
first finding the building on the internet.
Martin Thomas (c)2005
Martin is a professional investor and
Entrepreneur. If you would like to discover more about being an
entrepreneur, you can read "The Million Dollar Mentor" by Hayden
Muller. Martin recommends this work highly and has used the very
concepts contained in the work for his own successful
entrepreneurial activities.
http://www.opportunity-investor.com
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The
Successful Entrepreneur - An Inspiring Example