“I am taking my time to learn all there is to know about the development side before doing one myself.”

The key to real estate development is selecting a qualified “team” to assist you – in effect you become the co-ordinator/development manager.

“you need to have some spare cash in case of setbacks”

You will require cash reserves to meet the…[Read more]

“One good enough reason for a developer to delay commencement of the construction is because he hasn’t made sufficient of the plan sales and is therefore unable to obtain construction finance.”

This was a possibility mentioned in my initial response that should be answered before proceeding.

In many cases the inability to meet the minimum sales…[Read more]

Below is my response to your post in the “Help Needed” forum.

“I was wondering if anyone knows if an Australian can takeover an assumable mortgage in another country?”

Depends on the country and its foreign investment policy.

Check whether the country where you plan to invest permits foreigners to own property. Many countries do not permit…[Read more]

“I was wondering if anyone knows if an Australian can takeover an assumable mortgage in another country?”

Depends on the country and its foreign investment policy.

Check whether the country where you plan to invest permits foreigners to own property. Many countries do not permit foreigners to acquire real estate without immigrant status.

Also,…[Read more]

“Why is the buyer’s deposit at risk? It isn’t here, as it is lodged in the Real Estate trust account.”

My response was “in some cases”.. the buyers deposit is at risk”.

Not every purchase agreement allows the buyer to recover 100 percent of the deposit.

The feedback I have provided is not specific – I do not know the development, the developer…[Read more]

“Tie it up with a long term option (or, more likely, a long term unconditional contract)”

– When the contract becomes “unconditional” the land is in effect sold subject to settlement. In order to secure a long term settlement date it is likely the offer will need to exceed the valuation.

– A “long term option” restricts the vendors ability to…[Read more]

As a general rule, Australian residents must pay tax on all income, whether it arises in Australia or overseas.

This includes foreign wages or income such as rent/profit derived from foreign property and dividends from shares in foreign companies.

However, tax already paid in the source country can be offset against this liability.

You should…[Read more]

“I have purchased 15 OTP apartments in the last few years, and not one of them had been started before I signed my contract.”

I am not questioning the stage the development is at when the apartment is purchased.

My point was.. “It is not often a developer will sustain debt for 3.5 years, let alone wait 3.5 years to realize a profit”

Being a…[Read more]

To clarify, my comments are specific to raising equity capital, whereby the syndicated parties receive equity [i.e. shares, units] in accordance with their investment.

They then proceed on the basis that if the project fails, they lose their investment. If it succeeds, they benefit accordingly.

Not “borrowing” funds as such, where the borrower…[Read more]

To clarify.. if the captial gain/profit is brought back to Australia then CGT can apply.

A qualified tax accountant will provide information specific to the case in point.

— Michael

Interest applied to mortgage loans is tax deductible in the United States.

— Michael

The key difference is a “joint venture” is often the amalgamation of two or more active businesses, whereby a “syndicate” generally applies to the formation of a new entity for the purpose of raising and investing capital.

Definitions:

Joint Venture – the cooperation of two or more individuals or businesses in a specific enterprise, each…[Read more]

“Even if it cost 100k to raise 2 million, I think it would be worth it in the long run- in interest saved”

The above statement is not clear. The money needed to prepare and distribute the documentation will only be interest free if you have the cash reserves.

Any funds raised through private investors – whether for the startup costs or actual…[Read more]

CGT is not payable in New Zealand.

CGT is incurred in Australia when capital gains originate offshore.

— Michael

The proposed subdivision in Luggate [mentioned above] is potentially a very good investment.

The developers are highly respected and successful business people in the district and have considerable experience in the planning and environmental process.

However, this subdivision is still only proposed and must be submitted to the Queenstown Lakes…[Read more]

In New South Wales the laws regulating residential strata titles are the “Strata Schemes Management Act 1996” and “Strata Schemes [Freehold Development] Act 1973”.

A “strata company” is the managing entity created when a strata plan [referred to above] is registered with the Land Titles Office.

The strata company maintains the property on behalf…[Read more]

“I know someone who did all the work involved in preparing the prospectus himself without having a lawyer involved.”

This is not a good idea unless the person raising the funds has vast experience in these matters, and has worked with a lawyer in the past to prepare a prospectus.

Even in this case a lawyer should still be used to review the…[Read more]

Unless you have investment partners ready to finance the proposed venture, experience managing equity funds, and a successful track record, “syndicates” can be a very difficult and time consuming exercise – the majority do not obtain financing.

I do not wish to discount your plans, however you may want to consider partnering with someone…[Read more]

I have been following this post and thought it worth commenting.

“assigning contracts and options and foreclosure (repo) deals.. just wondering what the general opinion on this board is of this kind of dealing”

Assigning contracts/options/foreclosures is a mainstay in the United States and has become common in Australia and New…[Read more]

I am not familiar with the locations, however, as a general rule I would recommend the larger of the two without question – if tenancy is not an issue and they are of a comparable standard/quality.

Often the capital gain with a serviced “studio” apartment is minimal at most – i.e. 1-5 year holding period.

But there is a “red flag” – the delay in…[Read more]