Hi all,
I have the opportunity to purchase a property in West Footscray that requires a reno. I have priced the reno at between 25k & 30K, I have no problem doing the reno. I have a question about which way to aquire the property.
1. I am considering makeing an agreement with the vendor on the price they require $X, doing the reno and then haveing the vendor sell the property and taking $X with the remainder comeing to me. ( the property is vacant)( the vendor saves agent fees)( I save on stampduty)Or should i just purchase the property outright.
What are the pro’s and con’s of option 1.Creach
1) If you dont have title you won’t be able to borrow. This may not be an issue as $25 – $30K isnt much.
2) If you don’t have title and you are doing work to the property you are the one who will have to chase up your profit. What happens if the Vendor decides not sell after all but just rent the property out again and he can’t pay you back.
Cheers Richard
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I think Steve Dover (one of John Burley’s Aust graduates) teaches something like that. Surely you would have an enforceably contract with the vendor if they agreed.
Either that, or you charge them a fee for doing the reno, get your money back at settlement, and half of the extra sale price achieved.
Would certainly save on your borrowing costs, your interest costs, no stamp duty for you etc. etc.
Cheers
Mel
I think Steve Dover (one of John Burley’s Aust graduates) teaches something like that. Surely you would have an enforceably contract with the vendor if they agreed.Either that, or you charge them a fee for doing the reno, get your money back at settlement, and half of the extra sale price achieved.
Would certainly save on your borrowing costs, your interest costs, no stamp duty for you etc. etc.
Cheers
MelThats the way I am thinking, get it in writing by a solicitor, might cost a few grand but not as much as what is to be saved.
Can you see any pitfalls?
Thanks Creach
No, not really creach. Unless you have a cost blowout and there is no profit. I think you have to make sure that the Vendor does not lose out as well.
Other than that, if you have a good relationship with them, and can make them some money as well, why not?
Cheers
Mel
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