Flips- onselling a contract- how specifically?

Sounds very dangerous if you lack the funds to settle. If you sign a contract, then you will be liable to settle and would probably be sued if you cannot – in return you could sue the person you onsold the property too.

Not the sort of strategy you will read in a book or learn from a lecture.

These strategies take time to learn and understand and even when you have done your upteenth deal you are still learning.

I have done well over a dozen flips with amount well over the $5Mil mark but must admit i would have never done it as an initial sdeal if i had been risk adverse and did not have the capital to be able to settle if all went wrong.

Hi Gennady

I am certainly not an authority in this area (but Rick Otton is) however for what it's worth I will attempt to answer your questions…

> 1. How do you find somebody to assign a contract to (just ads in the paper?)

That's one way – especially the little local rag, not a metro daily.  Bandit signs, fliers, letter drops, even radio advertising is surprisingly affordable. I have a lot of success with the public notice board outside our local supermarket.

> and how many prospects is it necessary to find?

You can only sell it once, so…  one that buys. (!)

> 2. What happens if the person you are assigning a contract to bails out last minute and more importantly, how can we precent this?

You need a contract with them.  Ask your solicitor.

> 3. How do you chose an area that suits this strategy?

Any area where you can buy a property well under market value to help the seller out of some difficult situation, and you can sell at market value from a potential purchaser.  Easiest and safest is an area where there are a lot of people wanting to buy.

> 4. If you are assigning the contract to a third party before settlement how do you access the property to show it to prospects , you don't own it? What do you tell the vendor and buyer about the process-

Access right should be a condition of purchase.  Try to get at least 30 days unoccupied access to "clean up", otherwise, put something like this in the contract:  "With 24 hours notice, Seller agrees to give purchaser reasonable right to private viewing of property for the purpose of showing potential occupiers"

> they'd both be better off cutting me out and meeting each other half way on the price.

You need a caveat.  See your solicitor.  Should cost less than $200.

> 5. I am in NSW and will incur double stamp duty- given the huge difference between the buying and selling price that is necessary to make a profit, i am inclined to ask if this strategy can still work in NSW and if anyone uses it?

Ask Rick Otton.

If you have a "purchase and sale contract" signed with the vendor, you will be liable for Stamp Duty.  No getting around it.

If you secure the property in some other way (e.g. with an option to purchase for $x in y days, and a then put a caveat on the property to protect your interests so they can't sell it to another in the meantime)  then you can sell your option to a purchaser with no Stamp Duty liability.

There will still be costs of course, but a lot less than Stamp Duty.

Hope this helps… a bit.

Lance

"then you can sell your option to a purchaser with no Stamp Duty liability" – Regretfully this is not the case in each State.

Qld for one has no duty on Option Contracts but certainly 2 of the States I am aware of you are still charged Duty.