I am wondering how to go about attracting an investor in a deal I am interested in.
I haven’t worked out the whole deal yet and what my % should be compared to the investors. Any ideas would be helpful.
I am in the middle of a sub-division at the moment, so I cannot put any money into the deal just yet.
The deal is:
I have found a house on 32 acres for $380,000.
I want to sub-divide into 5 x 5 acre lots and a
1 x 7 acre lot with the house.
The house is a 4 bedroom, brick veneer, central heating and 2 bathrooms, 5 car garage.
Sell house for $310,000 on 15 acres.
Sell 5 x 5 acre lots for $80,000 each (conservative) = $400,000
Costs: $80,000 sub-division (power,water,council)
Stamp Duty: $21,000 on house.
bank/solicitor costs: $2,000.
Potential $300,000 profit.
I need an investor to apply for and service the loan for the house for 6 to 12 months (that’s how long the sub-division should take).
I will put up the money for the sub-division costs which = $80,000.
How do you work out a fair %. Also is anyone on the forum interested?
If you need any more information, please e-mail me.
[email protected]
Thank You.
Lee.I just thought I’d take some time to reply to you Pebbles as I think there are some things you haven’t considered.
Tax. Both Income and GST. I assume this will be done through P/L company so you don’t attract CGT. For each prop you’ll have to pay 10% GST. And on your EBIT you’ll have to pay company income tax at 30%.
Interest payments. Your investor may have to make these if they are servicing the house loan through a standard mortgage.
Your council/power/water costs are OK but it all depends on what conditions the council imposes as part of the development approval.
I also think your legals are a little low but that’s neither here no there.
Doing a quick calc, assuming a everything goes to plan and there are no overuns, I see a profit of more like $150K-180K.
Regards,
Shane
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