my first post so here we go
land subdivison just launched on premium part of sunshine coast. Major queensland company with good reputation and spending a lot on infastructure
has offered me an option to purchase a block to be used as
a car park for show homes and land salespurchase cost close to 400k, i have seen contracts for other sales including show homes and it appears to be approx 7% cheaper than blocks already sold. it is also second largest block and will be surrounded by quality showhomes
they are offering 2 year lease at 7% with 2 x 1 year options, i am thinking of going back with offer for 3 year lease at 7.25% and they pay the rates. Would look to develop at end of lease or sell if enough cap growth
i had a friend in WA who did very well from this strategy before the boom, although i appreciate qld is a different market
i would appreciate any advice
thanks
markG’day Mark,
This sounds like a good opportunity. However, you should be aware of the following:
1. Make sure the lenders don’t treat this as a commercial investment and therefore only fund 60-65% of the purchase price.
2. While negotiating, make sure all outgoings (not just the rates) are paid by the developer.
3. If its a fixed term contract with the developer, try to fix the rates on your loan so that you know the exact cashflow.
4. In your negotiations with the developer, have CPI increases from second year onwards.
Hope this helps, good luckSanjiv
Be especially careful with Sanjiv’s point 4. Devellopers always seem to do this in their favour. Insist on an independent benchmark.
thanks for your advice
much appreciated
mark
hi mdavo1
Let us know how you go with the negotiation.“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
You must be logged in to reply to this topic. If you don't have an account, you can register here.
