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[Case Study] John Le Brun - Discount Strategy

This case study is from Real Estate Investar subscriber John Le Brun, and how he used Real Estate Investar to apply the discount property investing strategy.

I have subscribed twice to the Real Estate Investar tools, the first time lead me to the best deal I have ever found.

Property Deal Details

It is the Crown Mill complex in Dunedin New Zealand and consisted of;

  • 12 luxury apartments
  • A restaurant bar & function centre
  • A hairdresser
  • Another empty commercial space

The complex had an independent valuation at the time of $6m and was 80% unit titled with a valuation of $7.1m if sold this way. 

Initial Approach To The Owners

I contacted the owner directly and over 6 weeks tried several approaches with him from vendor funding to delayed settlement.

The challenge with the complex was that the Restaurant/bar/function centre was closed and half the apartments were empty.

This was at the start of 2010 and banks weren't interested and had big doubts over high end apartments and getting any large business running in the hospitality industry. In the end, I presented the following proposal which worked for both of us.


The Proposal

  • Purchase price: $3.5m
  • We would lease the complex for $270,000 for 12 months but if unable to secure funding would hand the keys back at the end.

This approach would allow us to find someone for the restaurant and to fill the apartments. The complex, if full would turn $430,000 in income.

I had spoken with our lenders who had said if I could fill the complex and keep it largely full for the period, funding would be likely.


The Results

Within three months I had the restaurant leased out, filled the apartments at good rentals and had things ticking along.

I then found private investors who funded the purchase (settled in May of 2011) and constructed a joint venture that provided for the completion of the unit titling and the sell down of the 15 units.

We will be splitting the profits.

We have nearly completed the titling process and should be going to market in February / March 2012
Real Estate Investar helped me find the complex through the filters I used, which was on trade me at $4.1m.

It had been on the market for nearly two years having started at $6.5m and steadily dropping to the $4.1m.

There was strong motivation at the time I approached the vendor. There had been many contracts put on the complex but everyone stumbled at the funding side. I believe mine was the lowest price and making it work was a mix of having the rights tools to find it (Real Estate Investar) and the creativity to work through the issues.
With the project coming to an end I have re-subscribed to Real Estate Investar and am looking for more deals. The software is fantastic and with My Valuer added makes it my one and only tool for all my real estate needs. I can't recommend it highly enough.

Thank you for producing such a smart, invaluable and easy to use suite of property investment tools.

This information was provided voluntarily by Real Estate Investar subscribers and has not been checked and verified by Real Estate Investar for accuracy or completeness. The examples illustrate what a subscriber claims to have achieved using Real Estate Investar's tools. This information was supplied on the dates shown above and its possible changes in the market, mean the financial performance of this property investment may be different today.

Topics: Discount

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