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Which Would you Pick

Discussion in 'General Property Chat' started by MTR, 17th Aug, 2016.

  1. MTR

    MTR Well-Known Member Premium Member

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    This is not as easy decision as you would think, because there are other opportunities I can jump into and also I need to find a new, reliable builder/s and short list.

    Option to exit and sell/off load a property with DA and make around $200,000? gross.... take my money and run and reinject profits into other projects? No headaches, bring back money to the table.

    or

    Develop the property where the market is still strong/performing well and make approximately $480-500,000 gross.... only if prices stay strong.

    Negatives
    Have to pay GST
    Build time will take 9-12 months
    Need a new builder
    More risk as I am out of State
    Need to manage cash flow
    Market could turn? but I would mitigate this risk by selling OTP and take my 10% upfront.
     
  2. alexm

    alexm Well-Known Member

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    @MTR , only you know the answer to this question.

    If you completed the development, what's the opportunity cost by forfeiting immediate cash for more profit in 12 months time?

    What's the risk profile for the current project? Does your gut tell you it's more/less than any future project?
     
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  3. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Take the $200K now and run. :)
     
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  4. MTR

    MTR Well-Known Member Premium Member

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    Thanks you are spot on actually.

    I don't want to give up the larger profit but I know that there will be a certain level of stress because I am also in the process of securing other deals.

    My partner said..... DONT BE GREEDY, YOU WONT SLEEP AT NIGHT, WHY DO IT??

    MTR:)
     
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  5. Perthguy

    Perthguy Well-Known Member

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    If you take the $200k, what will you do with it?

    Selling OTP mitigates the risk and secures your profits to some extent. Although, what happens if prices drop and the purchaser can't get finance due to a low valuation?

    Forget the numbers for a minute. Which do you want to do more, this project or the new project? Last time I took a lower profit because I wanted the new project more than the old project.
     
  6. MTR

    MTR Well-Known Member Premium Member

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    [/QUOTE]


    Good question, I have a number of projects in the US will use the funds to continue buying and building in this market.
     
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  7. Scott No Mates

    Scott No Mates Well-Known Member

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    Heads.



    But if that doesn't work, run a dcf & IRR on both scenarios.

    Gut feel, cut and run putting the profits into the next project.
     
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  8. Tonibell

    Tonibell Well-Known Member

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    Nice "problem" to have - you win either way.

    Take the $200K and have a holiday.
     
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  9. Perthguy

    Perthguy Well-Known Member

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    You will have to run your risk analysis but I like this option.
     
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  10. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    The more problems you solve the bigger the potential profit but the more problems you embark on solving more could arise out of it.

    Ask yourself which opportunity will provide a bigger profit with the least headaches and do that one!
     
  11. MTR

    MTR Well-Known Member Premium Member

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    I should have started a poll, but then I may get in trouble...LOL
     
  12. EN710

    EN710 Well-Known Member

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    Take the $200K now ;)
     
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  13. MTR

    MTR Well-Known Member Premium Member

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    Yes, I think I will.
     
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  14. C-mac

    C-mac Well-Known Member

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    As someone with currently zero development experience I am not in a position to give any constructive advice. But there is a lot of merit in the concept that 'a bird in the hand is better than two in the bush'...
     
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  15. Bran

    Bran Well-Known Member

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    Funny enough, these are almost identical numbers to my site! Either way, I've missed the boat to unload it.
     
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  16. MTR

    MTR Well-Known Member Premium Member

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    really damn, now it's the next cycle
     
  17. Bran

    Bran Well-Known Member

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    Yep, but that was the plan anyway.
     
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  18. Bran

    Bran Well-Known Member

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    The problem with being a guru is that no one knows better than you ;)
     
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  19. Barny

    Barny Well-Known Member

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    Need to manage cashflow...if it's impacting cashflow alongside of uncertainty I'd take 200k now. Sell.
     
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  20. MTR

    MTR Well-Known Member Premium Member

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    I know investor who purchased many deve sites, bread and butter areas, and then building in the following cycle, now retired 6 figure income, and young
     
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