In this day and age, when you decide to go into some sort of business, you know from the start you cannot always win and you will have to witness one of the parties involved lose out on the business itself.
However, Property Samba is a win-win-win project for all three parties in the project: the owner of the fixer-upper, the developer and, of course, you.
How the owner of the fixer-upper benefits from the project
The seller can sell the property faster this way. If he rejects your offer, the fixer-upper will stay on the market for an unknown period of time, which will eventually decrease its value.
He does not need to invest a single penny in the renovation project. His only assignment is to obtain the permits which will be required by the developer, and he may even be able to authorize the developer to perform this action. So the owner will just need to kick off his shoes, relax and wait for the apartments to be completed.
The homeowner will be spared from the stress caused by moving or hunting for other apartments; plus, he gets one more apartment, which he/she can sell or rent.
If the owner's intention is to sell the property and move from the area, he will be able to do this much more easily since the apartments will be completely renovated and smaller in size.
Eventually, the market value of the new or newly renovated apartments may surpass the market value of the old house.
This comes as a result of the developer's intention of using high quality materials in the construction process, thus increasing the final value of the property. Remember, the developer is motivated to install higher quality materials and to do a good job because he will be also compensated with apartments.
How the developer benefits from the deal
The initial thing that may "reel in" the developer is the fact that he doesn't have to hunt for developing projects by himself.
You have the place, you have the idea, and you have the owner on board, making the developer's job that much easier.
The developer is compensated with more than what he would normally charge for his construction/renovation services.
Remember to always offer the developer something that will surpass his construction costs. This is important because he will finance all of the investment for the construction. I advise you to offer half an apartment, or maybe even a whole apartment and make it part of the bargain deal. Still, do not forget to tell him (and include in the contract) that all of the unforeseen costs will be covered by him exclusively (hence the generous deal).
So, remember: the developer does not need to invest in land. The developer needs less cash to finance the whole renovation than in the case where he needs to finance the purchase of the land, as well. The developer needs less permits and less time to finish the renovation than in the case of building from scratch.
The major sewage, gas, electricity, telephone, water connections are already provided, which significantly facilitates the renovation process.
The developer knows how to negotiate deals with various subcontractors, so he may even lower the construction costs, leaving him with a profit that surpasses his standard fees. Moreover, he can even rent his apartments and earn additional income.
How you benefit from the deal
Your efforts will be well rewarded by having an apartment or finances without any investment or loans. If the first project rewards you with only half an apartment, after few months, when you find another project, you can earn an additional one and a half apartments, or maybe even more, which will leave you with an apartment, plus additional finances to decorate the apartment according to your taste.
You will also learn a great deal about the real estate business during this time. You will learn all about the costs, the advantages and disadvantages of certain areas of town, so that you might be able to start your own business.
You will stop paying rent, you will never have to deal with landlords ever again, and you will gain financial independence. No investment, no rents, no mortgages.
Additionally, you can earn extra income by renting out the other apartments, becoming a landlord yourself.
Now that's a real win-win-win situation in my blog!