The two big leaders in Yangcheng had a fairly smooth conversation with Wu Siyuan.
This matter is settled like this.
Five trillion is just the beginning.
After all, what Wu Siyuan has to do is not only buy land, but also build a house.
No matter which one, a huge amount of funds is required.
Five trillion is actually just money to buy land in China.
The funds for building a house require the support of credit.
This was also the case for domestic real estate developers in the past when developing real estate. They needed credit support. Otherwise, they would never be able to wait for real estate developers to raise all the funds to buy land and build houses.
This is the initial strategy of real estate developers, which is also the primary means of real estate development, using a layer of leverage.
The real estate developer first uses his own funds to purchase a piece of land. Six months later, he can obtain the construction certificate. Then he can mortgage the land to the bank and obtain a development loan at about 70% of the land price.
The interest rate is usually 8%.
Then you can pay the general contracting fee, which will take about 80% of the development loan, and you can start construction.
After construction has started and five floors have been built, you can get the pre-sale certificate, and you can sell the property off-plan at this time.
Assuming that the off-plan house sold can reach double the price of the land, first use part of the money to pay off the development loan, which can reduce interest expenses.
There is a high probability that the house will be completed and handed over in three years.
With this operation, developers can probably earn an annualized profit of 16.7% (ignoring interest), which is actually not a high profit rate.
This method of increasing leverage is generally used by small local real estate companies, so they cannot make much money. If they encounter unsatisfactory sales, they will still lose money!
So there are several ways to play.
One is to use trust leverage to obtain more liquidity.
The previous process has not changed, but after getting the land certificate, you mortgage the land certificate to the trust company and get about 60% of the funds, with an interest rate of 10-12%.
After real estate developers receive the funds from the trust, they do not develop the original land, but continue to acquire land.
.Six months later, I obtained the construction certificate, mortgaged the land to the bank, and obtained a development loan.
The subsequent process is similar, but in this way, the real estate developer will not only earn the original profit, but also receive a large amount of trust funds. This money will be much more convenient for any operation.
Another way to play is to use private equity leverage to advance funds to acquire land. This is based on trust, and then find private equity to advance funds, and then continue to acquire land. However, the interest rate of private equity is also high, generally 16-18%.
Then the construction certificate is used as a mortgage with the bank. After getting the money, the private equity advance is paid.
At this time, although the developer is penniless and unable to start construction, it can pay the general contractor a commercial acceptance bill (commonly known as an IOU, as a company was famous for its IOUs after a thunderstorm), which is equivalent to the general contractor advancing the funds to start construction. p>
Then it’s time to build a building, obtain a pre-sale certificate, sell the building with three plots of land, pay off the debt, and complete the construction in three years. At this time, you will probably make more money than before. After all, it is three plots of land, even if you have to pay back a high amount
interest.
This kind of gameplay already belongs to [White Wolf with Empty Gloves]!
But on top of this gameplay, there is a more routine gameplay, which is to superimpose infinite layers of leverage.
Here are three more methods:
One is to delay the project payment from the general contractor for as long as possible, use the interest-free money to go to a trust or private equity and use leverage to continue to use land to build houses, and the above routine can be repeated countless times.
The second is that after receiving the advance payment, he does not need to wait three years for the house to be delivered before acquiring new land to build a house. He can immediately appropriate the advance payment and find trusts and private equity to obtain land with leverage.
The third is that some buildings are not allowed to be signed online. They are mortgaged to the general contractor or a third-party company to issue bonds, obtain a new financing, and then buy land to build a house. (If the mortgaged properties appreciate in value in a few years,
, the developer can still make a profit difference)
Every project can be played like this, and theoretically it can be looped infinitely.
This is why some real estate companies can grow from 100 billion to 1 trillion within 5 years.
Through the above methods, developers can make a lot of money, but some make more and some make less. The key to this is the turnover rate. In other words, they need to get the land quickly, open the market quickly, and pre-sell quickly.
Collect money quickly!
This cycle can only earn 5 billion if it is repeated once a year. If it is repeated 5 times a year, it can earn 25 billion.
Assume that the annual interest on a fund is 12%. If the turnover is fast and it is used five times a year, the interest will become 2.4% each time. Isn’t it surprising?
The interest rate of 2.4% is extremely cheap.
In addition to turnover rate, large scale is also an important indicator of making money.
Small-scale developers only have one property in hand. No matter how fast the turnover is, they can only play with it once, and their profits are very limited.
However, large-scale real estate companies have dozens or hundreds of projects on hand, so funds can be moved between projects. For example, use the advance payment from disk A to acquire land in disk B, and use the funds obtained from the mortgage of disk B to acquire land in disk B.
Play C drive.
Not only that, the more projects there are, the greater the degree of external capital that can be used, and the greater the leverage. With the help of leverage, a business that originally earned 5 billion from 10 billion can make a profit with less than 3 billion in principal.
5 billion! Even with nothing.
Even if the profit of a single property is low, it doesn't matter. If you use volume to make up for the price, the overall profit will be much higher.
How can we have dozens of projects? Get the land!
This is why a company’s debt ratio exceeds 85% and it is still frantically acquiring land:
Because——scale is profit!
But this is only possible when credit is loose.
Once credit is tight and you cannot get loans from banks, the capital chain will be broken, and then one layer after another will become one layer after another, and there will be a complete collapse!
This is also the reason why the higher authorities have to control the financial means of real estate.
If you continue playing, the risk is too great!
Once something unexpected happens, everyone will really be dragged into the water!
This is why, although the pillar industry of real estate is so important, the authorities still firmly implement the three red lines for real estate developers.
This is to actively squeeze the bubble and reduce system risks.
[Chaoqun Group] is not prepared to play this kind of high-turnover real estate game.
Speak plainly.
How much money can you make in the real estate industry?
Wu Siyuan let [Chaoqun Group] enter the public rental housing industry with the intention of losing money.
Of course.
[Chaoqun Group] If we want to make good use of this public rental housing, we must also rely on the support of credit.
In particular, Wu Siyuan promised the two leaders of Yangcheng to use public rental housing as a starting point to comprehensively rectify the city appearance of Yangcheng, leaving room for the subsequent construction of the "Smart City", which resulted in [
Chaoqun Group] has to invest extra money in Yangcheng.
[Chaoqun Group] That five trillion yuan is really just too much.
When it actually hits, it's just a splash of water.
[Chaoqun Group] also has to borrow money from banks to build houses.