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Collaboration Proposal

  1. 1. -Collaboration Proposal- Statement of Intent This proposal is a solicitation and effort to bring together a collaboration of a few distinct South Florida players in the real estate market. The following will describe the details, risks, and plan of action. If you so decide to participate, attached is an Articles of Organization form which by typing your name into the Members column, save, and email the form back you certify your acceptance to participate. We have chosen the name Harvard Real Estate Development, LLC because many of us are associated to the university and the familiarity of the name is associated with high quality and prestige. Executive Summary The majority of offers on properties in the market are continuously being ‘low-balled’ until one in several is accepted because of unique circumstances. The theory is that repetitive attempts will deliver at least one good deal. This demonstrates a trivial success rate because much time can elapse before a substantially low offer is accepted buy a seller. This proposal is to create a more realistic approach to bids where a minimal 12% hurdle rate can be settled for instead of 40 cents to the dollar. Then combine a financial pool from the involved parties to be able to acquire several properties or multi-property bulk discounts to either sell for just a little more to a bargain hunter or hold as deemed fit. Even though each property represents little profit the theory here is that the sum of them will be significantly lucrative and we would be able to compete with some of the larger developers in South Florida for bigger assets. Like Biscayne Development Partners LLC doing Midtown, Forrest City’s Gulfstream, or Kite Realty Group’s Delray Beach Marketplace. In the market we are starting to see more transactions going to closing faster and the gap narrowing between prices offered and sought for properties. Capital gains taxes are expected to increase in either 2009 or 2010 and many buyers/investors are beginning to put their boots on. To begin to acquire several properties we need to collaborate. Collaboration is the key to success, by sharing knowledge, learning and building consensus. When a team or individual lacks a certain trait or discipline, then the other collaborative party may be well versed in the deficient area. Collaboration does not require leadership and can sometimes bring better results through decentralization and egalitarianism. In particular, teams that work collaboratively can obtain greater resources, recognition and reward when facing competition for finite resources. Plan of Action
  2. 2. To find the best deals in the market, we will begin to look into some of the $400 Billions of loans that are expected to expire in 2009 and find which have the option to extend or not. We will acquire the names of the lenders who have those loans then find what asset class and size to better depict the feasibility. Some management/advisory fees from the lenders may also be garnered to fund our endeavor. We will create a convention-line template to take in and spit out countless deals in hopes of filtering out a select few that show the most potential. “You cant steal in slow-motion,” in other words we will be financially prepared to close deals fast. As soon as we have determined the partners for this venture we will form the operating budget and outline individual involvement based on what you feel you would be most beneficial in. Risk Factors As with any project all the risk is held upfront and reduces as the project nears the end. In this case, there is no risk until a property is to be decided for purchase. If a decision bid or pass is not unanimous, anyone with a legitimate reason will be able to step out of the venture at any time. There are no good statistics or concrete evidence on the amount of offers below asking price or by what percent, but from asking a couple of local brokers and lenders it seems it is around 60% of offers are less than 40% the asking price, and 8% of those are actually accepted. Market Overview Florida accounts for approximately 15% of all the distressed properties in the U.S. There are currently 621,813 Pre-foreclosures, 173,596 Auctions and 107,773 REOs, which adds up to a total of 903,182 distressed properties. These are only the ones that are known and in the public records. By some experts estimates, the number of troubled households is probably double that if not more. (Sources: Florida’s Economic Climate ranks No.1 in the U.S., according to Forbes’s Best States for Business. Ranking 8th overall, Florida also scored among the Top 5 in the Labor and Growth Prospects categories. (Forbes, August 2008) Florida has the #1 Workforce in the nation, according to CNBC’s America’s Top States for Business. Florida also ranked high in Technology & Innovation and Access to Capital. (CNBC, July 2008) The time to act is now as Real Estate is expected to recover in 2011. (Real Estate Investor, Aug. 2008)
  3. 3. Time Line Jan 1st 2009: Have a team organized and specified duties to each member with deadlines. Jan. 15th 2009: A list of 15 properties will be evaluated from the banks to begin to acquire the prime few. Conclusion We will undoubtedly be successful when working together with the team that has been hand chosen. To begin the ball rolling just confirm with your name on the Articles of Organization and a quick statement of what you could do to aid the team. Any questions comments or concerns are encouraged in order to evolve any inefficiency. Thank you. Scott L. Podvin, Managing Director The Crest at Waterford Lakes, LLC Miami Ofc: (305) 665-3970 cell: (786) 229-8977 Kelvin Xuna, CEO Logical Real Estate, LLC Cell: (720)937-9103