Hello,
18 months ago I signed an 'off the plan' contract to purchase a block of land. Since that time I have learned alot!
As the property contract is soon to expire under the sunset clause. I have the ability to reconsider / renegotiate this purchase and am seeking ways in which I can use my new knowledge to leverage myself into a better position.. (yay I used that word)
As I am not totally sure this allotment now suits my investment criteria if I negotiate well it could provide me with a little leg up in the financial sense. Thus I am thinking Options.
How would I go about purchasing an option on this block for the price of the current contract. Then selling the option to another buyer for say 20k?
enabling me to walk away with the 20k, limited stamp duty and no capital gains but I guess income tax on the 20k?
How much would I offer for the option – land price is $138,000
Hi Intrigue
Congrats on deciding to get creative! The more creative you get the better you do. I have a few questions for you:
Do you have a contract to purchase the land for $138K?
What is it currently worth?I use options to purchase property but I wouldn’t purchase an option off someone unless I could make money as well, so the land value would have to be well over $160K now to make it worth your while. I always look for the win/win/win opportunies. The vendor, the purchaser and me. Here is one of the ways I would go about it. I could offer to option the block for 6 mths, while I get a DA (development approval) for a house to be built. I would offer an option fee of $500 but offer a contract price of $140K so that there is a win for the vendor. I would try and find a local builder who would pay me a fee to build one of his houses on the block. This is a win for the builder and me. Then I would put the House & Land package with an agent to sell for me while I got the DA approved. I would have to pay $500 option fee, solicitor’s costs for option agreement and contract – $3000 – and may be able to squeeze $20 -30K out of the deal. This is a hyperthetical because I would need to know the location and be sure that there is a market for the H&L and the ability to make the profit.
There are possibly lots of ways to make profit from your situation. Hope this idea helps. Feel free to contact me if you need more explanation.
Ooops! Forgot the DA costs and surveyors, so maybe another $2K depending on the council. Cheers!
Thanks Fran, that is really helpful, I will have to put my mind to work but all of what you say seems very doable for me.
Yes I do have a contract on the property currently for the $138. Generally speaking this amount is 15% under the price of similar product on market. As the property is unlikely to be ready (settle) for another 12 months I am hoping that it may be worth more by then.
In addition I am thinking that I will be able get a DA approval to convert from single residential to duplex, again increasing the value of the allotment.
Had been thinking about the builder angle as well but am a little stuck on ideas of how to put this together in a way that is win win.. any help would be welcomed.
Wow a duplex! Fantastic!!!! Can u tell me your state and general location as I may know of a builder if it’s QLD or NSW but otherwise I suggest you look for builders in the area. Research their quality and house plans. Talk to them about costs to build what you are wanting (maybe turnkey price with floor coverings, fences, landscaping, etc) and tell them what you are doing and ask if they would sign a builders deed to pay you a finders fee for building one of their houses. I’ve had no trouble at all finding builders who will do this. You will need a savy solicitor and if you are in NSW I can give you the details of mine.
Great work!
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