Hi folks,
I have a great deal that I must act upon. the only thing is I have no money, it's a subdivision with the opertunity to build four units. The land is $550, units are $700 and $200 for everything else including GST. After selling at market rate I would be left with $250K profit. Again the only thing is I have no money so was thinking of doing it this way…
Asking vendor to stay as owner and go through subdivision
Sell all units off plan with promise to pay land owner $600K
Get banks to compound Interest onto buildQuestion is when do I pay the bank and owner? If I sell off plan will I receive the funds instantly or do I have to wait until houses are built?
thanks
DaveIf you can't get finance, another option is to do a joint venture with someone that has money or the ability to get money. You'd split the profits with them, but half of $250k is way better than $0.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
If you sell off the plan you will only get the funds at settlement. ie after the places are built and have occupancy certificates and the buyer settles.
Terryw | 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
This would be an options contract you would be better off oferring 50% of the profit to the vendor but you never know might take 50k you wont receive funds untill the places are built and sold to buyers….
thanks for your help, turns out initial selling estimate was way more than market value (spoke to other estate agents), once that was factored in the deal isn't any good, in fact it only just about breaks even. Nevermind, onwards and upwards
dhodgson wrote:thanks for your help, turns out initial selling estimate was way more than market value (spoke to other estate agents), once that was factored in the deal isn't any good, in fact it only just about breaks even. Nevermind, onwards and upwardsLook don't take this the wrong way as I applaud your enthusiasm ….. but shouldn't you have realised the property was over-valued the first time you saw it?
I spend 3-6 months watching and getting a feel for prices in an area I want to invest in so that I have a very good idea of what is under priced and what is over market value. It takes time, but it will save you many initial buying dollars and this is especially important if you are looking at development sites.
As you have discovered, if someone pay's too much they are left with zero profit and they have to be looking at a minimum of 20% if the deal is to be feasable. Property Developing, even small projects is not as easy as some would have you believe and paying to much for the site just makes it even more difficult.
Take your time, … there are plenty of opportunities just waiting.
Good luck …. and be patient….. it will happen.
Martin
Hi Martin,
thanks for your encouragement. 2 real estate agents game me initials prices at 460 and 470, however after speaking to more experienced agents it was dropped to 400, just shows that knowing who your talking too can count for a lot as well.
rgds
Dave
You must be logged in to reply to this topic. If you don't have an account, you can register here.
