Newbie needs advice on flip- please read!

Viewing 7 posts - 1 through 7 (of 7 total)

alltheway2003
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@alltheway2003
Join Date: 2006
Post Count: 7
March 22, 2010 - 11:47 pm
Hi guys thanks for all of your help so far. I have been offered a property through family member for $380,000 on 120 day settlement. I have had the property valued at $460,000, I also have a buyer that is happy to purchase the property from me for $420,000 on a 60 day settlement. If I sign the contract of sale in my name with “AND OR NOMINEE” Is it possible that I can basically get the property sold to the buyer directly from the seller and pocket the $40 grand profit? The problem is I am cash strapped and cant afford to pay the stamp duty etc, So just wondering if this is legal and all above board? Also wondering if anyone else has done this and the risks involved ie: My buyer pulls out, leaving me with a property that I have to settle on. Please let me know your thoughts. thanks
Paul Dobson
Participant
@pauldobson
Join Date: 2003
Post Count: 1,196
March 23, 2010 - 1:52 am
Hi alltheway
You could accomplish a direct transfer from the original owner, i.e. your relative, to your new buyer, via an call option. However a standard call option would normally allow your new buyer to know how much you've secured the property for. Not something you really want. There is however a specialist clause we put in our options to stop this from happening.
Another positive point about using the call option in your situation is, if your new buyer pulls out, you simply don't exercise the option. In this case all you'd lose would be your option fee (probably $1).
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
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An alternative way to finance your home.
blackhotel
Participant
@blackhotel
Join Date: 2010
Post Count: 140
March 23, 2010 - 6:39 am
I would hate to be the relative or maybe soon a far distant one.
Ryan McLean
Participant
@ryan-mclean
Join Date: 2010
Post Count: 547
March 24, 2010 - 2:57 am
I agree with Dannyde. Aren’t you ripping off your relative? Couldn’t they sell their property for $460,000? Giving them an extra $80,000?
How are you getting around this?
Ryan McLean
http://CashFlowInvestor.com.au
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god_of_money
Participant
@god_of_money
Join Date: 2008
Post Count: 970
March 24, 2010 - 7:59 am
Bad attitude!!!
I would help to sell the property to other seller and ask for commision…
You will need to pay stamp duty in NSW… it is treated as A SALE
alltheway2003
Participant
@alltheway2003
Join Date: 2006
Post Count: 7
March 25, 2010 - 10:08 am
Thanks for your posts, but i hate my relatives, so I am happy to pocket some cash at their expense. If you met them, you would yoo !! LOL.
Paul Dobson
Participant
@pauldobson
Join Date: 2003
Post Count: 1,196
March 25, 2010 - 12:03 pm
Hi All
I think I'll stay out of the moral argument here, as there are obviously two very different views.
Regarding the method I outlined above, if the property is in NSW, there will be one amount of stamp duty payable. This is because the resulting Contract of Sale will show that the title will transfer from the original owners to the new buyers.
However, with the new regulations in Victoria, full stamp duty on the strike price of the call option would be payable and therefore, to complete the transaction, with a call option, would incur double stamp duty.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone Me
An alternative way to finance your home.