"There's not much to keep me busy, just analyzing some stocks and collecting rent," Yi Anguo said with a smile. "It's not like you, Mr. Zhuo. Blue Coast Phase Two sold out, now you're selling Phase Three, and before that's even sold out, Phase Four is already gearing up to hit the market. You must be making money every day, counting it until your hands cramp!"
"My dear brother, you don't understand my difficulties. You only see the money I'm taking in; you don't realize how much I have to spend every day," Zhuo Weidong said with a wry, helpless smile.
Yi Anguo just smiled without saying anything. A real estate developer in this day and age not making money? What a joke.
"Didn't you tell me last time that you wanted smaller apartments? You said they're easier to rent out," Zhuo Weidong continued. "Our Blue Coast Phase Four will mainly feature smaller units. The two-bedroom apartments are just over 60 square meters, the three-bedrooms are around 90 square meters, and we also have one-bedroom apartments at about 40 square meters."
"Mr. Zhuo! Your Blue Coast Phase Four hasn't even launched yet, has it?" Yi Anguo interrupted. "As for the property handover, that's still nowhere in sight."
"We haven't launched yet, but it's coming up soon. We plan to open on New Year's Day, which is just two months away," Zhuo Weidong explained. "As for the handover, it'll happen by next October at the latest."
"I already have 1,000 units. I never planned on buying more," Yi Anguo added.
"Why not? This is a very profitable deal for you," Zhuo Weidong said. "You wouldn't have to spend a penny out of pocket and would still get paid. It's a breeze, and 1,000 units would be yours."
"It is indeed a great deal, but I typically only buy ready-to-move-in properties that are fully furnished," Yi Anguo replied.
With 1,000 units already, he was quite content and genuinely had no intention of buying any more.
"Actually, the apartments in Blue Coast Phase Three are our best work yet, with private gardens, outdoor swimming pools, and kindergartens. But the units are all large; even the two-bedroom apartments are over 80 square meters. The three-bedroom, one-living-room apartments are over 90 square meters, while the three-bedroom, two-living-room layouts range from just over 100 to over 130 square meters. We even have four-bedroom options from over 140 to 190 square meters," Zhuo Weidong said, smiling.
"They are a bit harder to rent out and not as cost-effective for that purpose. The units in Phase Four would probably be easier to rent, making them a better investment."
Yi Anguo clearly remembered that starting next year, the large luxury apartments in Shenzhen City would be the first to see price hikes. Even years later, the larger luxury homes would remain the most expensive. In 20 years, the properties in Blue Coast Phase Three would sell for the highest prices. In contrast, Blue Coast Phase Four, which consisted mainly of smaller units, would have the lowest prices—and not just by a little, but by a substantial margin. The price for Blue Coast Phase Three would be over 110,000 yuan, approaching 120,000 yuan per square meter, whereas Blue Coast Phase Four's price would be just over 80,000 yuan per square meter. So, if he were going to buy anything, it would definitely be a property in Blue Coast Phase Three! Why would he ever choose a unit in Blue Coast Phase Four?
"Even if I were to buy, I would only buy a property in Phase Three, not Phase Four," Yi Anguo said, shaking his head. "Personally, I prefer larger apartments. The spaciousness makes them feel comfortable to live in, whereas smaller apartments feel cramped and oppressive."
"Are you interested in the Phase Three properties, then? I can't offer them to you at the same low price as the Phase Two units, though," Zhuo Weidong said after a moment of thought.
Blue Coast Phase Three's units were larger and more expensive; Yi Anguo probably wouldn't dare to make a move.
"Your Blue Coast Phase Three is publicly listed at only 6,500 yuan per square meter, just 100 yuan higher than Phase Two. The actual selling price should be about the same, right?" Yi Anguo said deliberately.
"That's different. Otherwise, why would I say you were the lucky one? The market was bad back then, so we had to offer promotional discounts. On top of that, I was a bit strapped for cash and had a bank loan coming due. That's the only reason I sold 1,000 units to you so cheaply," Zhuo Weidong explained.
"But things are different now. Our price of 6,500 for Blue Coast Phase Three is firm, with no more discounts.
"If you want them, I can give you a small discount, but definitely not much. It's impossible for me to offer you the same price as I did for Phase Two."
"So what's the lowest you can give me per square meter? I need to see how many units I can afford," Yi Anguo asked curiously.
"I still suggest you buy from our Phase Four. Honestly, I don't recommend you go for Phase Three," Zhuo Weidong tried to persuade him again.
"If you really want Phase Three, the lowest I can go is 5,500 yuan per square meter. I can give you the 1,000 yuan per square meter discount as a cash rebate. Additionally, I can let you make the thirty-percent down payment based on that 5,500 yuan price."
"So, for a 100-square-meter apartment, you'd give me a 100,000 yuan cash rebate, but I'd have to make a down payment of 165,000 yuan. Adding property tax and other fees, one unit would cost about 190,000 yuan upfront. After subtracting the 100,000 rebate, I'd still need to come up with 90,000 yuan," Yi Anguo said, calculating aloud.
"That's about right," Zhuo Weidong nodded.
"That price is too high," Yi Anguo sighed. "Can't you do better? What about 5,000 yuan per square meter?
"Just like the Blue Coast Phase Two deal, where the down payment was effectively waived.
"For Phase Two, you accepted a price of less than 4,200 yuan per square meter. Even at 5,000 yuan, you'd still be making a decent profit, wouldn't you?"
"Absolutely not! That's too low. I've already told you, you got lucky with Phase Two. We had no choice but to cut the price to recoup our funds. At just over 4,000 yuan per square meter, our profit margin was minimal."
"So you're insisting on 5,500 yuan per square meter?" Yi Anguo said helplessly.
"I can't go any lower," Zhuo Weidong stated. "5,500 yuan per square meter is the absolute lowest I can offer."
"Then there's nothing to discuss. I can't come up with that much money. Even if I wanted to, I couldn't buy more than a few units," Yi Anguo said, shaking his head.
"Actually, even if you sold them to me at 5,000 yuan per square meter, the best I could do is have the down payment covered. I'd still have to pay over 20,000 in property tax and fees for each unit. That's already my absolute limit.
"And you know these large apartments aren't so easy to rent out. I'd be the one stuck with the monthly mortgage payments.
"A two-bedroom apartment is over 80 square meters. I'd have to charge at least 2,600 yuan a month in rent, plus property management fees. A single unit would need to bring in at least 2,800 yuan, or I'd be losing money."
"The property management fee is negotiable. I can waive it for one year," Zhuo Weidong offered generously.
"Waive it for one year, and you call that generous? It should be at least three to five years!" Yi Anguo countered.
"Why don't you just rob me?" Zhuo Weidong shot back, half-joking and half-annoyed. "Three to five years? One year is already good. That's several million a year you're talking about!"
One insisted on a minimum of 5,500 yuan per square meter, while the other would only go as high as 5,000. Naturally, they couldn't make a deal.
Yi Anguo sat for a while before leaving. For one thing, at 5,500 yuan per square meter, he truly couldn't afford it. For another, he wasn't that keen on buying anyway.
Although he knew housing prices would rise rapidly, he was already quite content with the 1,000 units he owned. Now that all 1,000 units were rented out, what could be better than living peacefully as a landlord, collecting rent every day?