Hi,
My question is in regards to realestate options? Is real estate options similar to flipping contracts in the US?
In the US I just tie up a property using a purchase contract and then find an interested buyer and just flip the contract to that person for a fee. I have successfully used flipping or assigning contract in the US to generate immediate cashflow. I was told by my accountant here that for me to flip properties in Australia I need to buy the property first and then flip it to another buyer. If I was to buy the property first then sell, I feel that liquidiation cost would eat up most of my profits. My accountant mentioned “realestate options” to me. He said that he was not to sure how to actually go about it. Would anyone be able to explain how to use realestate options?
Thank you kindly.
Allan
They are several ways to purchase or sell real estate using an Option arrangement.
In simple terms you would enter into a “Call Option” arrangement with a Vendor giving you the right but not the obbligation to enter into an unconditional contract to purchase a property for a given amount at a given time.
Usually the option will give you the right to nominate the intended purchaser after you exercise this right.
At the expiry of the Option you may elect to nominate a separate 3rd party to whom you have been paid a fee for doing so.
Under this arrangement there is no Stamp duty payable by you only by the nominated party under the Contract.
There are several other ways using Pty Ltd structures although the “Land Bank” rules under the Property Act may apply dependant on the asset value.
Hope this general simple overview gives you a guide.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
Hi Richard,
with all respect, how often do you find a vendor who is interested in this? and is the option (generally) for a term during which the entering into a contract of sale proper is forbidden?
are there more opportunities in this cooling market (i’m in brisvegas)?
cheers
brahms
If you don’t ask, the answer is no!!
Hi Richard,
Thank you kindly for posting a reply to my message. I really appreciate it!
Kindest regards,
Allanbrahms
Maybe not common with small lot residential sales but i assure you that if the property has potential subdivision approval or can be strata titled and the vendor wants a slightly higher than normal price then an Option is the only real way to go.
We utilise Calls as an effective way of placing a property under Contract when we havent decided whether we will develop it or flip it or when the structure or the Company in which we intend to purchase or develop it is unknown.
Most Real Estate agent are now familar with the Option and are findiong it easier to sell to their clients in Brisbane.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
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