Hi everyone, hoping someone can help. Hubby and I have found a property we think we could flip. It appears to us to be undervalued and we think we could probably find a buyer without too much problem. If we put in a clause “subject to finance” that would let us out if we couldn’t find a buyer, but can we put in clauses like “4 month contract” or “able to be onsold” and when we do find a buyer, do we settle our contract then sell to them or is there a way to leave our finances out of it completely and simply onsell for the higher price? What if the contract states one price and we onsell at a higher price? How is this done? We are new to this and would appreciate any wisdom to help us.
Thanks,
Kerrie (Mrs Redhaven)You need to sign the contract with your name OR NOMINEE. Also, negotiating the longest settlement possible will help you find a buyer. Regarding the subject to finance clause, you actually have to apply for finance or I believe there could be repercussions.
Selling is merely signing a contract with the eventual buyer who settles on the same day you are supposed to settle (basically buys your contract).
_____________________________________________
[withstupid]
The forumite formally known as Big RobSo if we had a contract settling in 4 months time, can the new buyer settle earlier than that? And how to we get out of having to find finance (which we couldn’t afford right at the moment) for this property…..
No. They would have to settle when you settle. I don’t know how you would get around the finance issue. I would not do it unless I could afford to settle.
_____________________________________________
[withstupid]
The forumite formally known as Big Robhi redhaven
only advise i could comfortably give would be to discuss thoroughly with your solicitor.
cheers
brahms
mortgage broker
[email protected]
brisbaneHi Kerrie,
I’m pretty sure if you sign a contract to buy you will be slugged with Stamp Duty on sale. Get advice on this, but I think the best way is to take out an option over the property and onsell the option.
Regards
AlistairThanks guys, appreciate all the thoughts. Some things to think about!
Signing ‘and/or nominee’ would not help you get out of stamp duty in most states – unless you had a written agreement with in nominee before you sign the contract yourself (In Vic). I beleive it can’t be done at all in NSW or QLD unless the nominee is related (eg your spouse or your ocmpany).
If you want to avoid stamp duty, you could just charge a fee to the person you introduce.
If you want to sign the contract and then onsell, there is no need for finance at all if you can arrange an immediate settlement. ie you settle on the purchase and then immediately onsell to the new buyer. YOu just have to watchout if your buyer can’t settle – as you will have to. (then you would have to chase the buyer for non settlement).
Talk with your solicitor.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | 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
Terry is correct in Qld you are unable to sign “And or Nominee” and avoid the stamp duty issue.
Two considerations are
1) You use an Appointment Letter. You sign the contract in your name and receive a letter dated prior to the actual contract date with permission from the eventual owner appointing you to sign on their behalf. Maybe difficult in a flip situation if you don’t now who the actual buyer is to be.
2) You use a Put / Call Option.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
Thanks everyone for your advice. We have realised this is probably not the right time for us to have a shot at flipping…perhaps even just a little bit TOO deep for us little rubber duckies.
Thanks again but we’re going to let this one slide.
Red.
You could possibly secure the property on an option and then go and find a buyer. This way you get control but not the risk and it is a good learning curve also. I did this and made $4K profit (minus $1.00 option fee) for 45minutes work.
Cheers,
KiwiOriginally posted by Qlds007:You sign the contract in your name and receive a letter dated prior to the actual contract date with permission from the eventual owner appointing you to sign on their behalf.
Would this not constitute fraudulent evasion of duty?[worried]
Hi Kiwi-Fulla
Can I have a little more info on the options idea please. This is something I have never heard of. How exactly does it work?
Cheers
Rav
Originally posted by foundation:Originally posted by Qlds007:You sign the contract in your name and receive a letter dated prior to the actual contract date with permission from the eventual owner appointing you to sign on their behalf.
Would this not constitute fraudulent evasion of duty?[worried]
Foundation
It would depend when the letter was written. I am sure Richard was talking about a prior arrangement.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | 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
Hi Redhaven
Why don’t you try to get the vendor to hold some of the money in a second mortgage carry back, say 20%to 30% for 12 months, then use a long settlement period to give you the most chance to find a buyer. This means you will not need a deposit to get finance as your LVR is under 80%. If the worst happens and you can’t get a buyer before settlement you can still get the property and on sell it at a later date. Of course you still have to worry about stamp duty but if you can get the money to pay this it should work for you.
Kerwyn.Foundation
I was indeed talking about a prior arrangement.
This is often the case when the property is to purchased in a Pty Ltd name and requires both Directors to sign. The appointment letter is used so that one of the Directors can be appointed to sign on his own name prior to the Contract being changed into the name of the Pty Ltd.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
guys…….why are you going to contract to do flips anyway ??? the whole point is to just be the middle person ( like that ) that’s what options are for ….at your option you can buy it …but you don’t have to if you can’t move it on. There may be a case of stamp duty on the option, but hardly worth the paper for a $1 down deal ! You can still use “and or nominee” but that has no issues when on an option ..only when on a contract.
hope this helps.
EK[biggrin]
You must be logged in to reply to this topic. If you don't have an account, you can register here.
