Are firesale cashback deals on new and off the plan property safe to invest in? This is an example being considered at the moment:
Average price of suburb $350 K. Transport, shops, schools, medical all located within 1 km.
Purchase price $310 [brand new unit of 3]
Offer in at valuation which is $360k (Nett actual paid price is $310, $50K cashback)Loan of $360k at 80% is $288. The difference to Nett buy is $22k($310k -$288k = $22k)In costs are $22k difference plus stamp and settlement which is approximately $12k leading to total in cost of $34k
The idea is that the cashback can be used to pay the deposit and closing costs, without using up the equity in a line of credit.
First time investor, wondering if it is better to buy the cheap and nasty property down the road for the same price which has the option of being subdivided up later.IMHO,
if you are looking for a solution, that is an easy no thought required then go for your off the plan. If you are looking to be more active and expect more return in the long run then I would go the potential subdividable property. Of course it all comes down to :
1. Why you want to do what you ant to do, and
2. Running ALL the numbers in both cases to see which best suits point 1.All the best
mickInstead of going the cash back route, you could give me $20,000 grand and I will kick you in the crutch, give you back $5,000, and in time you will be much happier with the deal.
If you want I can arranage to kick you while you are taking in a water view .
Sorry ……. gor carried away…this was an old Henry Kaye technique used to sell overpriced property and make it sound like a bargain.
Do your own homework.. you will do better in the long run.
If this is a real fire sale, check out all the facts and buy off the liquidator /administrator.
'Average price in suburb 350k'.. you are talking about house data as an average.
You need compare apple with apple..
Don't get sway with these spruikers with "AVERAGE PRICE"
What is the definition of average…If you keen for particular property.. get a conservative valuation with "Qualified" valuer.. and do you own homework..
Otherwise… runnnnnnnnnnnnnn miles awayLoL… so this is how average prices are calculated :
REAL house value = 200.000$
spruiker value ( the profit that spruikers want to make ) = 150.000$needed sale price = 350.000$
Damn.. we need a sale price of 350.000$ to 'push up' the average houseprices. So what do we do ?.. oh man I have a genious plan !.. let's have these suckers pay 350.000$ and we'll give them back 150.000 of our spruiker money, so that our 'average' value goes to 350.000 !! Then we'll advertise THAT price as the legal average price for our suburb ! Yes it's great, I'm sure some sucker will think the average houseprices are 350.000 Mwahahahaaaaa(h)
Then ( and this is YOU Katta !!! ) some sucker comes and we tell them : You know that the average sales price is 350.000 right ? Just look it up , it's what everyone else paid for their houses !!!
We'll make a deal with you , you buy it for 360.000 but you get back 50.000 ! That's a great deal, we're actually losing money on this deal you know ?And you get suckered in.
Open your eyes people !!!
For once, I have to say I totally agree with Scamp. This has happened alot. Not really against the law as the govt gets their extra stamp duty and taxes etc, but highly questionable. Do you realise that you would be paying extra stamp duty for nothing? Oh, BTW it would be interesting to see what the tax office has to say about this when you sell. If you use the sales price as you base, then I would be surprised if you avoied tax on the initial cash back, otherwise it would be classed as tax avoidence. Some things to think about.
thank you all. Have decided this cashback strategy is not for me and will continue with my own research, and the agent who has been ringing me twice a day has now got the message that I am not interested.
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