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👇🏼 Check Out These Case Studies 👇🏼
Contains Real Members' Financial Numbers And Property Details That's Relevant To You
See More Recent Case Studies Below ⤵️
Secret Deal #1 - DIVIDE and CONQUER
THE SITUATION & EXECUTION
The client purchased an entire floor of a strata office building. The client then subdivided the entire floor into 8 smaller suites and sold each suite individually for a profit. By doing this, the client achieved a substantially higher return than if he had decided to sell the property as he purchased it.
Works included subdivision of property title and strata plan, installing common-area and inter-tenancy walls and doors, splitting the electricity meters, and reconfiguring the air-conditioning zones. The work took a total of 3 weeks to complete.
INVESTMENT OVERVIEW:
Strategy: Divide & Conquer
Asset Type: Strata Office
Net Lettable Area:
746 sqm at acquisition
638 sqm at disposition
Location: Metro Sydney
Purchase Price: $4,100,000
Date Acquired: 2017
Method: On Market Private Treaty
Total Sold for: $5,592,000 (638 sqm)
Sale Date: Over 12 month period
Profit: $1,160,263
ROI: 70%
THE NUMBERS
Acquired for: $4,100,000
Stamp Duty: $205,000
Legal Costs: $2,200
Total Acquisition Cost: $4,307,200
Subdivision Costs: $215,000
Holding Costs: $103,170
Total Rental Income: $143,550
Total Sold for: $5,592,000
Agent's Commission: $141,117
Legal Costs for Sale: $16,000
Profit: $1,160,263
Capital Used: $1,652,200
ROI: 70%
Secret Deal #2 - NO MONEY DOWN
THE SITUATION & EXECUTION
The existing tenants in the building had expiring leases and were paying $260 per sqm gross in rental, which is 40% under market rental. This was due to a long period of poor property management by the seller.
The seller and buyer agreed to a 10% deposit in exchange for contracts along with a 3-month settlement, and the right for the buyer to engage the existing tenants for lease negotiation prior to settlement.
During the settlement period, the buyer renewed the leases with the existing tenants at $480 per sqm. This includes lease incentives of $805,000 payable to the tenants over the lease term of 5 years.
This resulted in an instant increase in valuation to $16.1m. The buyer secured a loan at 60%LVR on valuation. The loan amount was enough to cover the purchase price, pay for stamp duty and related purchasing expenses, and released the initial capital invested.
INVESTMENT OVERVIEW:
Strategy: No Money Down Purchase
Asset Type: Freestanding Office
Net Lettable Area: 1,677 sqm
Location: Metro Sydney
Purchase Price: $9,000,000
Date Acquired: June 2019
Method: Off Market Private Treaty
Current Value: $16,100,000
Funds Used: $1,000,000
ROI: 64%
THE NUMBERS
Acquired for: $9,000,000
Stamp Duty: $450,000
Legal Costs: $7,700
Total Acquisition Cost: $9,547,000
Valuation at Settlement: $16,100,000
Loan at 60% LVR: $9,660,000
Unrealised Profits / Equity: $6,440,000
Net Rental (Less Incentive):
$6440,000 per annum
Secret Deal #3 - VALUE-ADD REFURBISHMENT
THE SITUATION & EXECUTION
Acquisition of a well-located office building in the North Shore. Opportunity to upgrade to modern finishes and increase rent. An underfunded and undermanaged asset with a non-natural owner but exhibited identifiable value enhancement drivers.
SHORT-TERM STRATEGY:
Secure a tenant. Physical upgrades where CAPEX can improve income and value growth – new paint, new carpet, transform into open-plan office.
MID-TERM STRATEGY:
Improve tenant quality and lease term. Add lightweight structure to existing buildings to increase Net Lettable Area by 40%.
LONG-TERM STRATEGY:
Divest income-stabilised assets to investor or redevelop the property (and possibly adjacent properties) into a boutique shop top housing development.
LIMIT RISK
Requested and received a 6-month settlement period
Used long settlement period to get a head start in finding a tenant
ran all financial models using hypothetical rents 20% lower than what agents claimed
TIMELINE
Exchanged in August 2017
Signed Heads of Agreement in December 2017
Obtained bank valuation using Heads of Agreement in January 2018
Settled in February 2018
Undertook refurbishment in February 2018
Tenant commenced lease in April 2018 on a 5 + 2 year lease term
THE NUMBERS
Acquired for: $9,000,000
Stamp Duty: $450,000
Legal Costs: $7,700
Total Acquisition Cost: $9,547,000
Valuation at Settlement: $16,100,000
Loan at 60% LVR: $9,660,000
Unrealised Profits / Equity: $6,440,000
Net Rental (Less Incentive):
$6440,000 per annum
Secret Deal #4 - DA & Flip
THE SITUATION & EXECUTION
The buyer purchased a dated double-storey commercial building located within 500 metres of an existing train station.
Taking advantage of the property's mixed-use zoning, the buyer lodged a DA shortly after settlement to maximise the existing planning controls, resulting in an application for 17 residential apartments, 2 commercial suites and 1 ground-floor retail.
Due to heightened interest in the area as a result of the announcement of a future Metro Station in close proximity, the buyer decided to flip the site upon receiving development consent from the local council.
INVESTMENT OVERVIEW:
Strategy: DA & Flip
Asset Type: Office
Net Lettable Area: 1,877 sqm
Location: Metro Sydney
Purchase Price: $4,000,000
Date Acquired: 2016
Method: Off Market
Sold for: $7,060,000
Sale Date: 2018
Profit: $2,222,947
ROI: 131%
THE NUMBERS
Acquired for: $4,000,000
Stamp Duty: $205,490
Legal Costs: $5,500
Total Acquisition Cost: $4,210,990
DA Costs: $250,000
Holding Costs: $190,000
Sold for: $7,122,500
Agent's Commission: $178,063
Legal Costs for Sale: $8,000
Profit: $2,285,448
Funds Used: $1,684,396
ROI: 136%
Secret Deal #5 - CALL OPTION
THE SITUATION & EXECUTION
The seller of the land needed $2m immediately to fund another ongoing project he was undertaking. He offered his land for sale via an off-market campaign with the condition that $2m was released to him upon exchange of contracts. At the time the market value for the land was $15-$16m.
The buyer negotiated the price to $10m and proceeded to purchase the land via a call option. The option fee was $2,000,000 to the seller. After 12 months the buyer sold the option to a major developer for $28.5m.
INVESTMENT OVERVIEW:
Strategy: Buy Low, Sell High Using Options
Asset Type: Raw Land
Location: South Sydney
Purchase Price: $10,000,000
Option Fee: $2,000,000 paid on exchange
Option Term: 24 months
Date Acquired: September 2016
Method:
Call Option via Off Marketing Private Treaty
Sold for: $26,500,000
Sale Date: October 2017
Profit: $17,394,000
ROI: 860%
THE NUMBERS
Acquired for: $10,000,000
Stamp Duty: $500,000
Legal Costs: $22,000
Total Acquisition Cost: $10,552,000
Sold for: $28,500,000
Agent's Commission: $570,000
Legal: $14,000
Net Profit: $17,394,000
Funds Used: $1,684,396
ROI: 136%
Secret Deal #6 - LEASE RENEWAL
THE SITUATION & EXECUTION
The property is a freehold industrial building leased to an ASX listed tenant with an expiring lease. The long standing tenant was paying below market rent and the buyer purchased the property on a 8% net yield with the strategy of renewing the lease and increase the rent to market.
The buyer immediately proceeded to negotiate a new 10 year lease with the existing tenant and increased the rent by 30% which is inline with the market. This resulted in a 38% increase in the property valuation.
INVESTMENT OVERVIEW:
Strategy: Under Rented Expiring Lease
Asset Type: Tenanted Industrial Investment
Location: Ipswich
Purchase Price: $3,250,000
Initial Rent: $250,000 net pa
Initial Yield: 8% net
Date Acquired: September 2022
Method: Private Treaty
New Rent: $325,000
New Yield: 10% net
New Valuation: $4,480,000
THE NUMBERS
Acquired for: $3,250,000
Stamp Duty: $172,683
Legal Costs: $3,000
Total Acquisition Cost: $3,425,683
Capital Used: $1,150,683
Equity Profit: $1,230,000
ROI: 106%
ROE Cashflow: 16.4%
Who Are We?
Property Lions is Australia's leading commercial property buyers' advocacy, advisory and asset management firm.
Property Lions operate in three states, being New South Wales, Victoria and Queensland.
Property Lions is partner with XCommercial, Australia's largest independently owned commercial agency business.
Together we have over 40 team members, 5 offices and 4 divisions.
About The Founder
Will Tong
CEO & Founder
Will is regarded as one of the top commercial property professionals in Australia.
He has over 22 years experience in the property industry, specialising in commercial, development and investment grade properties, and have completed over 600 property deals totalling $3.5b in transactions for nearly a thousand investors.
Prior to founding Property Lions, Will held senior positions in a number of global real estate firms, such as CBRE, JLL, Cushman & Wakefield, Colliers and LJ Hooker Commercial.
Today, Will is a full-time dad, entrepreneur, mentor and investor, who is passionate about helping Australian families reach financial freedom through property investing.
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