Hi Everyone,
I’m a registered builder and have built a couple of Spec homes in the past preferring not to advertise them until they were completed.
I have someone wanting to buy my next house off the plan. Am I better off selling him the block at market value then building the house for him? More like a traditional builder/ client relationship.
Or would it be better to keep it all in my name until finished? If I take this option can I still claim progress payments in the normal way.Thanks in advance,
Pete
Pete,
Good idea to let everyone know where abouts you are, could make a difference to opinions. Just helping out…..
Jarrod.
http://www.jenterprisegroup.com.au
data-security-communications-entertainment systems<- home networking and home theatres- talk to me first!!
*Technology Consultants*
Brisbane.Gold coast.Sunshine coastThanks Jarrod,
I’m in Hobart
Originally posted by Pete&Jackie:Hi Everyone,
I’m a registered builder and have built a couple of Spec homes in the past preferring not to advertise them until they were completed.
I have someone wanting to buy my next house off the plan. Am I better off selling him the block at market value then building the house for him? More like a traditional builder/ client relationship.
Or would it be better to keep it all in my name until finished? If I take this option can I still claim progress payments in the normal way.Thanks in advance,
Pete
If your profit margin is the same, it would seem to be beter to sell him the land and enter into a normal building contract. This will be much better for your cashflow.
Having the money for the land in your pocket now rather than when you finish building may allow you to buy another block of land and repeat the process
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
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FREE subscription http://www.metropole.com.auThanks Michael,
Very good advise,
Pete
and then when that deal is organised you will be in a position to start on another spec home, as the first one wil have nil cash requirement. of course it will be hard to collect the same profit from a house and land conpared to a spec home. with the house and land the buyers bank will need to agree to (a) the current market value of the land and (b) your building contract. The 2 added together are unlikley to be the same amount as your spec home less holding costs.
http://www.megapropertygroup.comINVESTMENT SALES * RENTAL SOLUTIONS * STRATA MANAGEMENT
Hi Pete&Jackie
interesting post.
The one main item here is price if the price is the either way then your customer is a lot better off.
1st
land 150,000
s/duty 8,100
build cost 200,000
total 358,100
2nd
house sale
358,100
s/duty 19,337
Gst would nearly be the same using the margin scheme.
but your client saves 11,237 in tax.
So I would go for option 1 and explain the above So you can pad your fixed price contract with a little of the 11k up to you.
As for the question on the progress payments thats a little more involved and you need to structure it knowing which bank lender is lending use of number one and you don’t have to worry.here to help
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