North Shore, Vancouver, British Columbia, Canada
It didn't take long for our favourite (all right, 'favorite') builder-developer to get into trouble again. This time, in North Vancouver.
The Challenge: Back then (1970s), the sale of individual lots within a residential sub-division required the Provincial Government's approval, obtained through the prior filing of a Real Estate Prospectus (Real Estate Act (RSBC 1979).
In this case, and for unknown reasons, our Developer was contending with multiple delays, which finally had him facing a financial crisis. With a closing date looming, again, at stake was the forfeiting of a hefty purchase deposit and all that had gone into producing that Prospectus, the related District of North Vancouver's approval process, subdivision planning and engineering, and all the other prep work related to this 50-plus lot project.
The Need & How it was Met:
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Money! ...Our Builder-Developer had to complete the Property Purchase or forfeit all. However, no Bank would touch a project that did not have all its approvals, particularly the Provincial Prospectus. Private investors were also a 'no go', serving only to price the project 'out of the market'. A million-dollar lot today was usually less than fifty thousand dollars then. With little margin, there was little to share. What to do?
Big challenges call for big ideas. Although it was early in my business career, I already had a 'deal' or two under my belt, and with some such knowledge gleaned I had another 'eureka moment'... suggesting he create an "Interim Buyer".
As unsophisticated as I still was then, I knew that a Company could buy an interest in an undeveloped property. Furthermore, I knew my Allwest/Findex Builders were in need of home-building-lots. There were 52 lots planned for this site, but the rules, (BC Corporate/Securities Exemption), only allowed a 'Non-Reporting' Company a maximum of 25 Shareholders. To accommodate this, two Companies were quickly incorporated, followed by the immediate transfer of the Interim Real Estate Purchase Agreement to these entities. With site layout surveys, planning and engineering completed, it was not difficult to assign a Home Building Lot to a specific Share Certificate, 'bundling up' the combination into a "Unit Offering".
The Result: So armed, I visited with the individual member-subscribers of our Findex/Allwest Builder Buying Group and, eager as they were for more Building-Lot inventory, sold out the project. Our Builder-Developer saved again! This took little more than a week. My reward: $1000 per lot. What a windfall!
Well, wait a minute. It was sometime later before I found out that the typical commission for a Single Family Residential Sale was much higher, but as I said, what a windfall. This project was the turning point... for another of my 'big pivots'.
Note: ​
"Unlocking the mystery" of a property – i.e., realizing its inherent value may have little to do with the physical property itself. Instead, as this example demonstrates, resolution may only involve how "the deal" is structured or how an alternative financial solution comes to pass.
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