All Topics / Creative Investing / Is this flipping?? and how does it work?

Viewing 6 posts - 1 through 6 (of 6 total)
  • Profile photo of karenjkarenj
    Member
    @karenj
    Join Date: 2007
    Post Count: 3

    I am interested in buying an old deceased estate double block of land that although it is two titles, it is selling in one line due to the messy state, needs demolition of house which is built over boundary, major clearing and boundary fencing. A dirty job, but releatively easy for a decent profit. I was thinking to maximise my profit I could get a long settlement, clean it up, do the work and on sell prior to settlement to avoid holding and closing costs. Does anyone know exactly how this strategy works?

    Profile photo of chumpchump
    Participant
    @chump
    Join Date: 2005
    Post Count: 21

    Hey Karenj

    I don't know exactly how it works, but assumably you would purchase on a long settlement with a licence to occupy.  This means you can go onto  the property and start reno etc.  Not sure if the vendor would be keen for you to demolition the house however.
    And basically you would then on sell the property to someone else and have the settlement dates coincided with each other. Basically that would be it in a nut shell.  I would be also be asking your solicitor how to set out the special conditions in the contract for this stategy.
    Good luck

    Chris

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    You would want to use a Put / Call Option however i dont think you would find that a deceased estate vendor would allow this.

    If there is that much profit to be made why not bite the bullet and settle rather than risk the fact of loosing the deal altogether.

    A P & C is normally used when you wish to flip the deal and is standard in the development industry.

    Richard Taylor | Australia's leading private lender

    Profile photo of karenjkarenj
    Member
    @karenj
    Join Date: 2007
    Post Count: 3

    Thanks for the advice guys. I initially thought I could avoid stamp duty etc, but since realised it's just as easy to settle on the property unless by some stroke of luck someone wants to buy it beforehand. We've put in a request for a 90 day settlement with access for demolition and see how we go. Strangest thing is there is a good 150k profit in this deal and I have been the only person to even inspect it. Perhaps I can thank those trusty down pours in Sydney at the moment that makes wading through the scrub less than pleasant!!!

    Cheers

    Karen

    Profile photo of Jase and FlicJase and Flic
    Participant
    @jase-and-flic
    Join Date: 2004
    Post Count: 190

    Hi
    In regards to trying to avoid the stamp duty, I have asked a couple of solicitors about this, and basically the State Revenue Office has a very clear statement that if a property is on-sold, or transfered in any way to another party for a higher price, then they see it as 2 separate sales and will charge stamp duty to both of the buyers. This is the same if you use "And/or nominee" clause, or call option contract. Basically they won't let you aviod the stamp duty. You have to pay it for your purchase price, and the next guy has to pay it for his full purchase price.
    I am in Victoria though, so it might be different in NSW or other states.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    I am in Victoria though, so it might be different in NSW or other states.

    Definately different in the Sunshine State. There is no stamp duty on Call Options.

    Richard Taylor | Australia's leading private lender

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