Developer Unloading Too Many Properties!!!
Hi,
I have a strange situation on my hands. I am under contract to buy a nice little duplex from a gentlemanwho was one of the original developers of the subdivision when it was built three years ago. As a result, he owns a significant number of units in the area. After I had my unit under contract, I discovered that this gentleman is trying to unload at least 8 of the proeperties he owns, all on the same street.
I am worried that a seasoned investor like him would be trying to unload so many properties at the same time. Could there be something wrong with the subdivision? Also, the basic rules of supply and demand dictate that a higher supply will lead to lower values. Does anyone know if there is any way to find out what could be going on?
Unfortunately, the realtor I am working with keeps saying that everything is fine and I shouldn't worry. However, he can't give me anything concrete to allay my fears.
Any thoughts, comments or similar experiences would be very much appreciated.
JS. 
I would imediatley contact this worthy person. Find out what is going on. I am sure he will tell you either directly or by some inadvertent gesture or eye movement.
You might find that it is only a health consideration or is in response to some personal problem.
The fact that your alarm system has been activated is stimulae enough. Check it out. Also check his prices and see what they are in relation to your purchase. Check his financing. Is he taking back. Who knows once having satisfied yourself to the causes of this behavoir, there just might be an interesting chance to expand your holdings at most favorable prices.
Lucius
JS,
If the rent market is good in the area, and the inspection comes out good, you could have a great opportunity to use purchasing power to your advantage, offer a lower price, while also offering to purchase multiple buildings. I would also try to tie him into a repair/warranty contract, since he developed them. Good luck!
Builders sometime keep the certain portion of the subdivision they develop so to defer the tax.
Against those units they borrow for new projects or they sell the same whrn the rite time comes. Don't be alarmed; what's to much for you is pinuts to them so go chat with Mr. Dev and see if there is something you could get out of all of this.
Knowing that, your realtor might just be right about how everything is just fine.
Go do it and post back so we know how the thigs went on. [ Edited by omega1 on Date 02/04/2004 ]
I agree with omega1 coming from a developer background. When I develope properties on the Florida Gulf Coast. My partners and I will hold most of the units after the project sells enough units to pay all construction,marketing and other cost. We do this to take advantage of tax and appreciation in the properties value.
If they are all rented and cash flowing buy them all. Being newly built property you will have far less maintenance for several years.
Good LUCK and Thank You
Hope this helps some
Ted Jr
Sounds like you could offer a package deal and get prices lower.
Dont look at this like a negative......"There must be toxic waste around here somewhere".
He wants to sell 8 units. Ask about his reason but dont WORRY about his reason.
If he is really motivated this might be a great opportunity for you.
As for lowering the values in the Subdivision, that downward effect will only last until he sells them all.
Good Luck,
N