Just curious, is it common to sign agreements with land owners to develop their land and give back to the land owner a percentage of the buildings developed in the land? For example depending on the land value someone might build 20 villas in a land that does not belong to him/her and give back to the owner of land 25% of the villas or 5 villas. There is some risk to it but the advantages are clearly obvious.
It will be very hard to finance if someone else owns the land. Also very risky, what if there is a dispute, the owner has title, the builder nothing.
I have seen a developer offer a fixed price and a % of profits after selling, to the vendor as an incentive.
Terryw
Discover Home Loans
Mortgage Broker
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
This is something I see many clients initially suggest as they think it decreases their funds required for a development as they don’t have to fund the land.
The problem is this rarely works.
Lenders won’t fund the development as they can’t mortgage the property as it is being built, since it is on someone else’s land.
Also if you don’t have control of the land and a dispute arises (as Terry suggests) you are in trouble.
I currently have one client in exactly this position and they are in the midst of an expensive legal dispute
Michael Yardney
Metropole Properties
http://www.metropole.com.auin other words, other peoples land, other peoples money, other peoples profit ??
Regards – Dr Seuss
actually there is a company doing this very well in Perth. Like everything IMO, you need to gain momentum and specialise in the field, no point just doing a one off deal.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
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