But now that your buildings are finished, they’ve been declared unsafe and have to be demolished and rebuilt. How could the bank possibly give you another massive loan? Without money, forget about rebuilding—you won’t even be able to face the custors who have already bought properties from you!
Although Ren Real Estate Developnt Company is an established, major developer, the current crisis is too severe. If they can’t secure the funds, their only option is to declare bankruptcy.
Ren Xingsheng knew he had caused a major disaster. He also realized that Ou Xiaolong’s company was facing the exact sa problem, with dozens of its buildings declared unsafe and slated for demolition and reconstruction. He assud Ou Xiaolong’s company also faced a capital shortage for the reconstruction and was probably teetering on the edge of bankruptcy.
However, what he didn’t expect was that Ou Xiaolong’s company had already begun demolishing the condemned buildings and was actively preparing to rebuild.
Ren Xingsheng rushed to find Ou Xiaolong. He asked him where he had secured the funds and if he could help him solve his own financial crisis.
Ou Xiaolong shook his head. He knew, of course, that Yi Anguo disliked Ren Xingsheng. The reason was simple: Ren Xingsheng had always looked down on Yi Anguo, and naturally, Yi Anguo wasn’t fond of people who disrespected him.
"Brother Ou! We’ve always been great friends! You can’t just stand by and watch go under!"
At this mont, Ren Xingsheng was like a drowning man grasping at a straw. Since Ou Xiaolong had already solved his financial problems, he must have a powerful backer. Soone with deep pockets must have invested in his company! If this person could help Ou Xiaolong, they could certainly invest in his company and solve his financial problems as well.
As everyone knows, the greatest cost in real estate developnt is the land itself. The amount spent on construction is often less than the cost of acquiring the land. Typically, land costs account for about fifty-five percent of a project’s total expenses, while construction only makes up about sixteen percent. The rest is eaten up by taxes, managent fees, equipnt, labor, and other miscellaneous costs. A developer’s profit margin isn’t actually that high, unless housing prices skyrocket, which is another matter entirely. In a stable market without a price surge, a developer’s actual profit is only about five to ten percent. So even though property prices are high, the developer’s cut isn’t as large as most people imagine.
However, that’s only on the surface. Real estate is a ga of high leverage. Most of a developer’s capital cos from bank loans; they only need to provide a fraction of the money for the initial land purchase themselves. Once they own the land, they can secure developnt loans from the bank. They build the properties first and then repay the loans after selling them.
For instance, a property might sell for one million yuan with costs of eight hundred thousand, which sounds like a small profit margin. But if the developer only invested one hundred thousand yuan of their own money to earn that two-hundred-thousand-yuan profit, their return on investnt is actually two hundred percent. When you calculate it that way, the profit is imnse.
A developer’s profit cos mainly from this financial leverage. Without bank loans, no one could afford to play the real estate ga; the required capital is simply too vast. Is there a single real estate company that doesn’t owe the bank money? The larger the developer, the more they owe.
For both Ou Xiaolong’s and Ren Xingsheng’s family companies, having dozens of buildings condemned for demolition and reconstruction was a ticking ti bomb. In this situation, what bank would dare to lend them more money?
The nature of banks is to add icing to a cake, not throw a lifeline to a sinking ship. The deeper the trouble you’re in, the less willing they are to lend you a di. When you’re riding high, banks will chase you down to offer loans, even if you don’t need them. They’ll call constantly asking if you need capital. But the mont you’re truly in a tough spot, those calls aren’t to offer help. They’re only to demand repaynt.
"Brother Ren, it’s not that I don’t want to help, but I simply don’t have that kind of money myself," Ou Xiaolong explained helplessly.
"I know you don’t have the cash yourself, but you have the connections! Where else would your funding have co from?" Ren Xingsheng pressed. "Since you have the connection, please, just make an introduction for ! If you don’t, you’re just watching drown!"
Ou Xiaolong frowned. "Even if I made the introduction, it would be useless. His money is already tied up helping , so what’s the point in you asking him now? Besides, he would never agree to help you."
"You haven’t even introduced , so how can you be so sure he won’t help?" Ren Xingsheng retorted, refusing to believe him.
"You don’t need my introduction because you already know him. In fact, you’ve spent years looking down on him," Ou Xiaolong shot back. "Think about it. If you go begging him for money to invest in your company now, do you really think he’d be willing to lift a finger to help you?"
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