I have the opportunity to buy land which will be subdivided. However I have to fully pay for my block which I can see on the subdivision plans, before the subdivision and infrastructure are put in place.
I am thinking of buying a couple of blocks.
I know I will make a profit on the land when the subdivision is completed. Am I headed for trouble in any aspect?Would appreciate some assistance with this one.
Thanks
Jules [angel]JULES1
Email MeWhat State are you in?
Robert Bou-Hamdan
Mortgage AdviserM: 0414 347 771
E: [email protected]
W: http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter: See – http://www.mortgagepackaging.com.au/index_files/newsletter.htm
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty Ltd
Originally posted by JULES1:I have the opportunity to buy land which will be subdivided. However I have to fully pay for my block which I can see on the subdivision plans, before the subdivision and infrastructure are put in place.
I am thinking of buying a couple of blocks.
I know I will make a profit on the land when the subdivision is completed. Am I headed for trouble in any aspect?Would appreciate some assistance with this one.
Thanks
Jules [angel]I don’t understand why you have to pay in full until the subdivison is completed and you have a title. This is dangerous and can not occur in Victoria.
Please tell us more details so we can make a more informed statement
Michael Yardney
Metropole Properties
http://www.metropole.com.auCannot occur in NSW either. That is why I am asking what State???
Robert Bou-Hamdan
Mortgage AdviserM: 0414 347 771
E: [email protected]
W: http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter: See – http://www.mortgagepackaging.com.au/index_files/newsletter.htm
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty Ltd
Its in Victoria. but the person that currently owns the land said the bank would not provide a loan for the subdivision and so he wants the money up front so he can carry out the subdivision. Its a very large area cost about $2million, so he wants the money up front before he commences the subdivision work.
But he has got the plans ready and apparently approved.
Jules1
JULES1
Email MeI also thought it was a bit strange that the Bank would not provide the loan based on the great deal that this looks like being. I don’t really want to provide the full sum up front and wait until the subdivision before I can sell.
But the land really looks good. So I don’t know what to do
Jules1[blink]
JULES1
Email MeOriginally posted by JULES1:I also thought it was a bit strange that the Bank would not provide the loan based on the great deal that this looks like being. I don’t really want to provide the full sum up front and wait until the subdivision before I can sell.
But the land really looks good. So I don’t know what to do
Jules1[blink]
I can tell you what to do – stear clear of this one.
By law in Victoria he can’t use your money anyway, it is held in trust until settlement to protect you. But even if you did –What if you pay him your money up front and things don’t go to plan.
And how would you finace it? – you don’t own the property so you can’t use it as security.
This doesn’t sound like a deal you should be looking at
Michael Yardney
Metropole Properties
http://www.metropole.com.auMichael
Couldn’t he get access to the deposit if the purchaser agrees to its release?
Terryw
Discover Home Loans
Mortgage Broker
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
BTW, I think it is very risky too!
Terryw
Discover Home Loans
Mortgage Broker
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Originally posted by terryw:Michael
Couldn’t he get access to the deposit if the purchaser agrees to its release?
Terryw
Discover Home Loans
Mortgage Broker
Click below to email meNot according to Victorian legislation. I am told it must stay in trust so the vendor does not have access to it for the development.this is for “off the plan” type developments.
Otherwise for a normal property sale the vendor can access the deposit.
In this case the vendor wants the full amount – this is a no no
Michael Yardney
Metropole Properties
http://www.metropole.com.auThanks all
You have convinced me not to get involved. I can wait until subdivision is complete and then buy some of first releases. I can then sell them later. Even if I make a little bit of profit in the end it is better than losing my shirt to start with.Yes I’ll take your advice. You’ve wised me up. Many thanks
Jules1[exhappy]JULES1
Email MeI am a person who carries out our subdivision work and I know that this is risky. Not only are you taking the risk of a getting a capital gain but you are also taking on the risk of the developer. eg weather, construction overrun from say rock, unsuitable ground, cost blow out, government department interferences, OH&S safety issuses as well as will the developer run off to the French Riveria. We would never ask our customers to take such risk as they do not share in our profits. Hope this helps
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