How to Buy Land with a Later Settlement

dealover on 30/11/2017 - 19:58

Hi
I heard someone discussing today that apparently, you can buy some land away from suburban areas which settle likes 2 years later with a 10% deposit.
So by depositing for example like $ 25k you can sell it before it settles and make like 200% profit as the market is booming like anything.
I was hoping I could get some advice please:
1. How do you find such land openings for Sale?
2. How do you secure one?
3. Is it a good deal?
4. Is this treated as an Investment for Tax?
5. Are you doing or considering doing it?

Financial

Comments

  • LYRICALRAVER on 30/11/2017 - 21:07

    yeah and you pay some lawyer too much money for doing some paperwork/land titles office thing where they charge way too much than they're really worth! what a joke - so much for land and stamp duty taxes. govt takes your hard earned dollars as usual

    • EightImmortals on 30/11/2017 - 22:38

      You don't know the half of it. :)

      https://hia.com.au/IndustryPolicy/Tax-reform

      "Information was gathered and collated on all the taxes that contribute to the final price of a new home. The results demonstrated that the residential (new home) building sector is not only heavily taxed, but it is the second most highly taxed industrial sector in Australia. The total taxation burden on a new home can now be well over 40% of its purchase price - most of which is borne by the home buyer. This means that the tax component of a new home is now so large, it usually exceeds the costs of land."

      Also:https://tinyurl.com/y878xr8d

  • peterpeterpumpkin on 30/11/2017 - 21:11

    I don't know of any deals specifically but what you're looking at is a "call option" (https://www.finder.com.au/property-option-agreements).

    You have to carefully read the contract when it comes to options to purchase property (like any contract).

    • djkelly69 on 30/11/2017 - 22:00

      That is one way to do it, but not the only way. Should definitely be more cost effective as you can avoid paying stamp duty if done correctly, but you will pay a fair bit more in legal fees because put and call options are a lot more complicated than a standard contract (meaning a lot of cheaper conveyancers/solicitors won't touch them).

  • donga100 on 30/11/2017 - 21:15

    Way too hard. Just invest your $25k into bitcoin.

    • pegaxs on 01/12/2017 - 08:51
      -1

      …. and it’s gone.

      I am a bit of an anarchy watcher and I kind of want bitcoin to crash. Hilarity will ensure and many lol’s had. But at the same time, I kind of want to eat humble pie.

      I remember looking into bitcoin when it was around $200 to $300 each. It kinda scared me as it was going up and down like crazy then. Kicking myself now, but I also want to see where this peaks out. It’s going to be astronomical at its peak, but when that crash comes, it’s going to do so much collateral damage on its way down…

  • djkelly69 on 30/11/2017 - 21:56
    +1

    Ask yourself how likely land values are to triple in any area in 2 years. Assuming you could find land likely to do this (you won't), why wouldn't the developer hold onto the land until it was finished and sell the subdivided land themselves for 3x the price?

  • chumlee on 01/12/2017 - 06:16

    Can you sell it if you haven't settled and therefore don't own the title?

    Are you sure it's not something like a call/put option they are selling?

    • djkelly69 on 01/12/2017 - 06:45

      can you sell it if you haven't settled and therefore don't own the title?

      You can 'sell' your right to it as in enter into a contract to sell it to someone else, and then when the land is ready and the contracts settle, there is a double transfer (developer to you, you to your buyer).

      • chumlee on 01/12/2017 - 07:30

        That sounds like a put option

        • djkelly69 on 01/12/2017 - 08:22

          That is an on-sale. It is nothing like a put option.

        • chumlee on 01/12/2017 - 08:45

          @djkelly69: not convinced. It would take days for title to clear before you can onsell you you will need to pay the full sale price first

        • djkelly69 on 01/12/2017 - 09:38

          @chumlee: You don't provide a title in your name, you provide a title in the name of the developer, a transfer from the developer to you, and a transfer from you to the end buyer. End buyer (hopefully) provides enough money to pay what you need to pay to the developer, plus your 200% profit.

  • Quantumcat on 01/12/2017 - 06:44

    If someone is selling land that is going to triple in price it is because they need money right now. I doubt any seller would agree to this.

  • ihbh on 01/12/2017 - 06:53

    Take note of the saying: a fool and his money are soon parted

  • usmanyousaf on 01/12/2017 - 13:25

    Sure the price will go up with in 1 to 2 year & probably you will be able to sell it with a bit of profit but you gotta remember the person you selling will also ask you for 2 years of settlement.

  • dealover on 04/12/2017 - 14:42

    Thanks a lot for your help / guidance looks like it’s not a great option.

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