Property Options in Sydney - Looking for WIN/WIN solution

Afternoon All,

I found this website some time ago and have enjoyed reading through the various threads and educating myself on all the various aspects to property investing and much more. I too am an investor in a way as a relocation to Sydney from Perth with my wife forced us to rent out our city apartment and effectively consign it to the investor property file. The more I read websites such as these, the more I find myself wanting to be more involved in this industry.

One area in particular that has interestes me is that of 'Property Options', more specifically, call options. Now I realise from previous threads that there appears to be some degree of caution from the wiser amongst you advising all newbies to be careful. These derivative instruments are complicated in nature and unless properly understood can end up with some people in tears. I understand the product. I understand to some degree how to use the product as an investment tool but there is so much more that I don't know, which i would like to change.

In short, I want to educate myself in this field, using all skills that I have (mostly analytical), learn skills that i don't have and work with someone in some capacity that makes both parties a winner.

A WIN/WIN outcome is what I'm after.

I work fulltime and cannot afford to pay out for expensive courses. My primary objective initially is to educate myself about how to use the product and how to make money from it.

I am motivated to learn and keen to hear from all you users/guests and listen to any advice that you might have to offer.

I am based in the inner city of Sydney and ideally would like to hear from those based in Sydney too.

Thanks again everyone.

Steelar

Hi Steelar

Is your interest in call options focused on what I might cheekily call, the Mark Rolton model, i.e. securing a property with a call option and then applying for a D.A. on that property, or, is it more along the lines of securing residential property with a call option?

I'm not into the first "model" but have been involved with the second for seven years now.

Cheers,  Paul

Paul Dobson - Vendor Financier - http://www.negative2positive.com.au
Ph: 0447 973 235 - http://www.jvpropertypartners.com.au
http://www.vendorfinanceinstitute.com.au

Hi Paul,

Thanks for your reply.

To be honest it was more along the lies of the first "model" you describe, that is to secure the property with a call option and then try to increase its value before onselling the option.

However, I am intrigued by your second model to which you are more accustomed to. Do you mean you secure a residential property through a call option and a put option simultaneously? I remember reading about that on another thread somewhere.

If you don't mind I would love to hear more about what you do with options. If more convenient to you could you PM me your reply?

Cheers

Steelar

Hi Steelar

We usually secure a property with a call option and a lease, both with the same term.  This is step one and it's important not to go past this step unless you are assurred that all this paperwork is correct and you secure your interest in the property correctly (based on your States procedures).

Once this paperwork is in place, you have a large degree of control over the property.

Of course, there's no point in entering into this transaction unless you know your exit straegy for the property.  Are you going to:
1.  Rent the property and keep it as a buy and hold
2.  Renovate the property and re-sell it.  This will require specific clauses to be added to the paperwork mentioned above
3.  Possibly even re-sell the property at a higher price.  This also will require extra clauses in the above paperwork.

For starters, I'd suggest you pick an exit strategy that suits you best.  Then learn the best way to find these properties. Along the way, you will need to become familiar with the paperwork mentioned above.

A word of caution.  Don't skimp on making sure your paperwork is correct.  Do utilise the services of a specialist solicitor.

Cheers,  Paul

Paul Dobson - Vendor Financier - http://www.negative2positive.com.au
Ph: 0447 973 235 - http://www.jvpropertypartners.com.au
http://www.vendorfinanceinstitute.com.au

currently working on 1 established 9 block of units strata titiling vendor gets 50k more for the property I make roughly 200k+

strata titling and onselling  we have learned there is many ways to use options but takes alot of offers to get 1 through

Nothing to see here

Does Mini but you only need the 1.

Just done 1 in N Brissie taken over a 18 months to go through but just got DA for 55 units and profit is over $1.5M

Richard Taylor - richard@tayloredfinancialsolutions.com.au Tel: 07 3720 1888
Residential Mortgage Broker providing structured home loan advice for investors and owner occupiers all over Australia.
Thinking of buying your next investment property using a SMSF. Email me for a copy of my SMSF EBook.

Richard,
That sounds like a good deal . Congratulations

I would suggest a lot of research as there are not many people who can do this successfully. Yes there can be a lot of money made in this area, with very little input, but you need to be very educated or have very good advisors in property and law.

It might be worth studying this for some time while trying some simpler investment strategies to get a hang of property investing. You only own one property so there is still a lot to learn, and to enter into such a risky and difficult method of investing could be heart breaking if you are not 100% dedicated.

You have probably read Steve's books. If you have they you might want to think about starting by investing in some positive cash flow property and learn the tricks of the trade.

But, by all means, go ahead with it. Just make sure you educate yourself and realise that it may be a hard slog in the first couple of years as you learn the ropes. Good luck.

Ryan McLean
http://CashFlowCapital.com.au
Positive Cash Flow Properties Are Just a Click Away

Hi Mini,

I'm looking at doing a similar thing for a block of units. Would you mind sharing what sort of terms you managed to negotiate with the vendor? eg option fee and term. I'm not quite sure how you go about  with selling the individual units - as I'd imagine they don't all get sold in one lot.  Did the units need any renovating?

Cheers

"The will to win, the desire to succeed, the urge to reach your full potential - these are the keys that will unlock the door to personal excellence"