Should i use an option or try and extend the settlement?

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bell432
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@bell432
Join Date: 2010
Post Count: 5
May 11, 2011 - 3:27 am
Looking to puschase a unit in brisbane that was affected by floods. It needs a bit of work but i could pick it up at a steal am i better off buying the option to purchase and doing the work then trying to sell or asking for extended settlement to get work done and apply for finance this however locks me into the sale any thoughts.
Paul Dobson
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@pauldobson
Join Date: 2003
Post Count: 1,196
May 11, 2011 - 5:18 am
Hi Bell
I would probably go with the Option and an approval to do the work. Possibly under a Lease where I pay rent while undertaking the work. You can then assign the Option to a new buyer and this will save you paying double stamp duty.
I'd also suggest you source what I call a "blind option" so that your new buyer can't see what you optioned the property for, i.e. your Option needs a "higher price" clause.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
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An alternative way to finance your home.
ALF1
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@alf1
Join Date: 2011
Post Count: 237
May 11, 2011 - 7:34 am
Hi Bell.
Good advice from Paul with regards to the option and he's the person to speak to for more info.
murasaki
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@murasaki
Join Date: 2011
Post Count: 3
July 7, 2011 - 3:44 pm
PaulDobson wrote:
Hi Bell
I would probably go with the Option and an approval to do the work. Possibly under a Lease where I pay rent while undertaking the work. You can then assign the Option to a new buyer and this will save you paying double stamp duty.
I'd also suggest you source what I call a "blind option" so that your new buyer can't see what you optioned the property for, i.e. your Option needs a "higher price" clause.
Cheers, Paul
Is this the same with a sandwich deal, buy on VF sell on VF?
Paul Dobson
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@pauldobson
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July 8, 2011 - 6:41 am
Hi Murasaki
Not really. Bell mentioned that he was looking to hold the property for a period of time, while he does the work he needs to do, prior to on selling it. He didn't mention on selling it with VF, so I didn't cover that.
With a Lease and a Blind Option, Bell would be able to occupy and control the property, while he does the necessary renos, prior to selling the property, i.e. assigning the option.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
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An alternative way to finance your home.
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
July 11, 2011 - 5:30 am
You have better get good legal advice as you wouldn't want to do all that work and then find out the option was invalid or not exercised in time etc.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Paul Dobson
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@pauldobson
Join Date: 2003
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July 11, 2011 - 1:08 pm
I couldn't agree with Terry more. We've done a lot of Options, of various flavour and have always had a solicitor draw it up for us. I been continually surprised by the additional points we've needed to cover, I haven't thought of. It definitely works for us.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
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An alternative way to finance your home.