Opportunity or not?

Question

So, an opportunity came my way and I have been wrestling with the numbers to confirm that the deal makes sense.  The situation is this:

A Piece of land zoned as a multi-family property but undersized is up for sale due to the owner not able keep the property (house is rundown and needs to be demolished).  The Public Trustee for the Province is now acting on behalf of the owner and is tabling offers (to be closed mid January 2015).

So that's the background, now for the situation... I am convinced that there are not many if any, who can put a multi-family unit on this piece of land which will meet all the City guidelines successfully; I managed to achieve this on a very similar site, which was completed in July 2014, only because of my training and coming from Europe where we have a lot of instances like this there.

Right now the numbers do not stack up, because the trustee's are asking a lot for the land, due to appraisers valuation.  Should I just make an offer which will be way under the asking price, or do I just let it go? I have not worked with a government body who is acting on behalf of the owner, would they be interested to negotiate, the realtor feels they won't; I don not trust realtors?

As mentioned, I can put four townhouse on the land, I developed the first of it's kind in Calgary on a previous and similar undersized site,  Multi-family plus meeting all the guidelines.

Anyone, out there able to give me any advice on how to deal with the trustees?

I know, its a hard one to respond to.

Ned Carey · Answer

@Kelvin Hamilton  What do you have to lose by making an offer? If the choice is walk away or make an offer that makes sense to you why wouldn't you always choose to make an offer?

One of my rules of thumb is "Never make an offer based on what the seller wants or what you think the seller will accept - Always base it on what makes sense for you."

Alexander Merritt · Answer

@Kelvin Hamilton

I don't have any experience with Trustee's but it sounds like from what you're saying you won't have contact with them at all for the first "round"; especially since you said they are tabling offers until mid January. That being said IMHO I would include as much info in your offer as you can. You want them to feel like you have a very solid plan and that you've thought about everything and can show details. Do you know if the bids will be made public? If not I wouldn't be worried about "tipping your hand" to them for what your plan is. I don't think they care. I think they just want a solid bid from someone who they know will be successful with the project so I say lay it all out there. The more detailed and exact your plan is with all your supporting information the more they may feel comfortable going with you. That may go along the lines with what others have been saying about building trust and repore with the Trustee.

Think of it this way, if you don't even get through the the next "round" will you be kicking yourself for not providing enough info?

Roy N. · Answer

@Kelvin Hamilton

Make an offer which is supported by your business case.   If you feel it necessary, include your analysis - or a summary thereof - with the offer.

If someone else comes overtop of your and overpays for the property ... smile and wish them well  {but keep tabs on it in the event they blow-up}.

Kelvin Hamilton · Answer

Good point Alexander.

I'll provide a rational with my bid for sure.

Thanks for your clear points on the matter.

Regards

Kelvin Hamilton · Answer

I get that Roy... I think that was the missing link from Ruben's advice, I do not have direct access to the Trustees as it is a Public entity.

All the same, the strategy is good to try and adopt if I get through to the next stage.

Roy N. · Answer

@Ruben Prieto

The Public Trustee involved here is not quite the same as trustees of a private trust, but an agency of the state.   That said, making the functionaries fell important and in control is not necessarily a bad strategy.

Kelvin Hamilton · Answer

Ok,

Thanks for your thoughts Ruben. Let's see how it pans out and whether the opportunity arises.

Ruben Prieto · Answer

LOL, 'all ears'.

My point of view is mainly in respect to managing the relationship.

Build trust.  You're not looking to completely exploit.

I cant speak to how much info to offer at first.  More of a gut call.  Depends on how necessary it is for them deal w you.

Kelvin Hamilton · Answer

I was just reponding to your strategy Ruben and for some reason the text box went blank. So if you receive two reponses from me then you know why.

So I was thinking that this is an interesting strategy, however at what stage can I play this, from the time I make my offer?

I am meeting with the realtor tomorrow morning to make my offer, which will be forwarded to the Trustees; do I give them a full explanation at this point as to what the difficulties are in offering more than the price I propose to offer?  Previous advise suggested that I should keep my advantage card close to my chest (i.e. my solution that will make the land profitable). Do I wait incase they counter offer before expressing my concerns to raise the price?

I am all ears ready to listen.

Thanks

Ruben Prieto · Answer

Your original post asks how to deal w trustees.

Allow them to feel in control in the process.

Act as if you are doing them a favor.  "What are your biggest issues..."  and address with your solutions.  Be a part of their team.

Express there are some major concerns on your end but you believe they may resolved if they can allow you some flexibility.

Think win win.

Opportunity or not?

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