Need Some Info on Landbanking

d-hunterz on 09/06/2017 - 11:56

Hi Guys, Just came across this add where a Guy bought a big piece of land 888k sqs and now seeking interests from investors to be part of the projects. Instead of subdividing the land right now he is providing units in trust and latter down the track when it comes down to subdividing investors will get their part of land.

Just seeking opinion from fellow ozbargainers on-

Whether any one has invested in this sort of project.
What are the risks associated with it.
Where can I seek info if the land will ever be developed( land is only 5 Kms from existing developments)

Financial

Comments

  • QW3RTY on 09/06/2017 - 12:20
    +2

    What are the risks associated with it.

    Buying 888,000 sqms of undeveloped land without any income.

    • d-hunterz on 09/06/2017 - 12:24

      The guy who bought the land has only 40 % Loan amount that he is trying to pay out by getting investors in.

      • QW3RTY on 09/06/2017 - 14:52
        +3

        Even worse. You're taking out a loan on a piece of land which isn't generating any income, doesn't have any confirmed development upside and has no serious investor commitment. Risky as!

        Where can I seek info if the land will ever be developed( land is only 5 Kms from existing developments)

        You could look for the council master-plan and see how it's zoned and what potential future uses are intended for the area surrounding the subject property. You could also check the land title for any existing development applications with the council DA tracker to see if anything is in progress.

        I would hope at least something is in progress or intended for the precinct, otherwise this seems just like a punt on a land-grab.

    • JimB on 09/06/2017 - 16:19
      +3

      Imagine mowing 888,000 sqms!

      The freshly grass will be a metre high by the time you finish the other end.

  • Dave Id on 09/06/2017 - 12:27

    Forget about it.
    Ain't gonna happen.
    Variation of a very,very old confidence trick.

  • cypher67 on 09/06/2017 - 12:44

    Sounds risky++. Unless you have some solid people vouching for the guy, I would walk away asap.

  • holdenmg on 09/06/2017 - 12:46
    +2

    Run, run away fast…

  • chumlee on 09/06/2017 - 12:47
    +11

    You want to own the land not units in a trust which can easily be manipulated and dissolved so you get nothing

  • djkelly69 on 09/06/2017 - 12:47
    +1

    Can't offer any advice on the process or specific risks, but make sure you use a competent solicitor if you go ahead with it (ie. not the cheapest you can find). You would want to check the ownership of the land, the trust deed/details, stamp duty implications, etc, etc.

  • Adz81 on 09/06/2017 - 13:18

    Whoa… any chance of a link to this? I'd love to read up on it… Sounds fascinating (not in a "JUMP ON BOARD" kinda way).

    • d-hunterz on 09/06/2017 - 13:46

      $​40K FOR 5,000 SQUARED METERS; or

      $​75K FOR 10,000 SQUARED METERS

      Cannot see on Google Earth but with Parwan VIC due to road name changed to Telephone Road

      High level and flat land with Electricity supply, telephone service, river water certificate are available

      GUARANTEE RETURN AT END OF 10 YRS = IF NOT HAPPY, WE WILL RETURN $75K + 10 YRS INTEREST 2% P.A.

      WE ARE APPLYING SUBDIVISION THEN SELL FOR PROFIT FROM TIME TO TIME. FIRST ONE EXPECTED IN FEW YEARS

      Our Parwan Investments Pty Ltd owns the land of 880,000 square meters

      One buys land of 10,000 sqm for $75K will own 10,000 shares WITHOUT ANY LIABILITY/DEBT

      GOOD THING ABOUT JOIN COMPANY IS WE WILL TAKE CARE ALL WORKS UNTIL SUBDIVISION GRANTED FOR PROFIT

      • NO STAMP DUTY WHEN TRANSFER OWNERSHIP IF YOU WANT TO TRANSFER IT TO OTHER

      COST: Land tax, council rate, subdivision fee, v.v… are totally very small for shareholder due to %

      NO bush fire, poison and flood free zone so no considerable maintenance costs

      RETURN: Are very high according to sale now and history and SAFE BECAUSE OF NO LIABILITY/DEBT

      And check the neighborhood areas where have been subdivided for price, such as:

      1. Hopetoun Park VIC (next door) easy $350K per 5,000 squared meters and

      2. Brookfield city (4Km) with easy $150K per 300-600 squared meters

      • Adz81 on 09/06/2017 - 14:05
        +5

        Holy shit…

        Run, run away…

        • enzioFirenze on 09/06/2017 - 14:16
          +2

          yeah this looks like a ponzi scheme.

      • cypher67 on 09/06/2017 - 15:17

        The English used alone should be enough to set off alarm bells

  • geek001 on 09/06/2017 - 13:22

    Hmmm… how much is this piece of land worth? Wouldn't you need to pay land tax if this piece of land is worth more than the threshold?

    • d-hunterz on 09/06/2017 - 13:47

      $​40K FOR 5,000 SQUARED METERS; or

      $​75K FOR 10,000 SQUARED METERS

      Cannot see on Google Earth but with Parwan VIC due to road name changed to Telephone Road

      High level and flat land with Electricity supply, telephone service, river water certificate are available

      GUARANTEE RETURN AT END OF 10 YRS = IF NOT HAPPY, WE WILL RETURN $75K + 10 YRS INTEREST 2% P.A.

      WE ARE APPLYING SUBDIVISION THEN SELL FOR PROFIT FROM TIME TO TIME. FIRST ONE EXPECTED IN FEW YEARS

      Our Parwan Investments Pty Ltd owns the land of 880,000 square meters

      One buys land of 10,000 sqm for $75K will own 10,000 shares WITHOUT ANY LIABILITY/DEBT

      GOOD THING ABOUT JOIN COMPANY IS WE WILL TAKE CARE ALL WORKS UNTIL SUBDIVISION GRANTED FOR PROFIT

      NO STAMP DUTY WHEN TRANSFER OWNERSHIP IF YOU WANT TO TRANSFER IT TO OTHER
      COST: Land tax, council rate, subdivision fee, v.v… are totally very small for shareholder due to %

      NO bush fire, poison and flood free zone so no considerable maintenance costs

      • geek001 on 09/06/2017 - 16:07

        Sounds a bit dodgy to me. Is there a reason why they are selling shares in the investment company rather than just subdivide and sell the land instead? Seems to me it would be better to break it up instead of keeping it as one plot of land. Based on the selling price, the entire plot of land is worth 6.6mil, which means the land tax payable is around 200k annually. It would make more sense to subdivide the land and sell it off to reduce the land tax liability. However, the land could be not zoned for subdivision yet, which means it is not worth very much and therefore no land tax.

        So either you are buying into a scam or buying an overpriced piece of land, in either case it is better to just pass on the "investment". :)

      • paulieau on 10/06/2017 - 13:27

        GUARANTEE RETURN AT END OF 10 YRS = IF NOT HAPPY, WE WILL RETURN $75K + 10 YRS INTEREST 2% P.A

        Good luck getting any money back after 10 years, especially if they're in any financial distress. Steer clear is my advice, all sounds a little dodgy.

  • poboy on 09/06/2017 - 14:24
    +2

    Land Banking has been a scam investment for some time. All the smart money already has the best locations. The dregs are now being used to part you with your money. It has a grubby history

    Key quote: 'Despite this he is unable to name a single land-banking scheme he has promoted that has delivered on its promises to investors.'AFR

  • Mumbles on 09/06/2017 - 14:29
    +1

    With interest rates so low and land being a relatively safe purchase. You have to wonder why bank managers are not approving his loan!

    The ASIC website says that Parwan Investments has only been registered as a company slightly more than a year:
    http://www.asiccompany.info/Parwan-Investments-Pty-Ltd-60935…

    That's only just enough time to set up a company in time to do this deal. How much properties and assets do you think Parwan Investments has? When it comes time to sue them and recover your money even the best legal experts won't be able to return you your money.

    Adz81's comment above links to the moneysmart.gov.au website which describes that there is no protection for investors.

    What are the risks associated with it.

    You lose all your money. As a bonus you have debts and financial pressures that break your marriage apart.

  • orza on 09/06/2017 - 16:35

    Providing units in trust… that is some serious legal structuring going on. I'd bet the company already has some badass legal structure to limit liability.

    River water certificate, electricity, all the stuff doesn't really matter right now. You will need tons of new infrastructure for any subdivision. The Brookfield lot prices you quoted would be for a fully serviced lot (roads, footpath, water, drainage, nbn, power, street lights, etc) and you will lose some developable land to parks, schools, waterways, major roads. For a better idea go to vpa.vic.gov.au and look at approved Precinct Structure Plans for nearby areas. Most new areas seem to get approx. 15 lots/ha. If it's more like Hopetoun Park (more likely) less infrastructure required but low density so much lower lot yield. Check Planning Schemes Online for possible overlays or environmental protection which could cause problems with rezoning later.

    Bottom line though, land banking is praying that land will be rezoned which magically makes it worth more. It might happen, it might not.

  • JIMB0 on 09/06/2017 - 17:32
    +2

    $40k/acre for farmland is a bit steep.

  • chumlee on 09/06/2017 - 20:21
    +1

    OP if you are convinced it's a great deal no one here can stop you.

    Just remember these famous words: "A fool and his money are lucky enough to get together in the first place.” - Gordon Gekko

  • Mkr on 14/06/2017 - 07:52
    +1

    Landbanking ponzi scheme brings 'Jamie McIntyre' from Century 21 to mind.
    Please google him before you proceed.
    Buying RCZ or FZ land outside Melbourne's UGB is risky AF. The current Labor government is not going to expand the UGB anytime soon.
    Bottom line: say thanks but no thanks to the guy who introduced you to this 'once in a lifetime' opportunity.

    • d-hunterz on 14/06/2017 - 10:52

      Thanks for the info, I am not gonna go ahead with this anyway.
      Once again thanks a lot to OZbargainers for helping me decide. Hopefully I would not regret in 10 years time :)

      • Mkr on 14/06/2017 - 11:30

        Who is the entity promoting this anyway? (ie. Who is behind Parwan Investments)

        • d-hunterz on 15/06/2017 - 21:47

          There is this guy named Jason based in Sydney.

      • Mkr on 15/06/2017 - 19:43

        ?????

  • sam-mic on 28/06/2017 - 18:46
    +1

    stay away

  • bargainhunter17 on 29/06/2017 - 00:20
    +1

    Let me see. You are swapping something valuable (cash) for a worthless piece of paper (units in a trust).

    Not a good deal.

    You want to own the land, not units in some trust controlled by someone else.

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