Forums / Property Investing / Creative Investing / Renovating for profit

Viewing 11 posts - 1 through 11 (of 11 total)
  • Profile photo of charlie123charlie123
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    @charlie123
    Join Date: 2007
    Post Count: 19

    Hi Everybody,

    Over the years I have renovated a number of properties and flipped them  for a quick profit. I am now looking for another project whereby instead of agreeing to purchase the property, I fund the renovations and do a profit share with the vendor. I can see this being advantageous for the vendor because they will get a higher sale price and also for myself because I don't have to worry about finance and all the associated holding expenses. I am looking for somebody who may be able to share their own experiences with a similarly styled deal or be able to recommend a solicitor that would be familiar with the concept and would be able to draw up the agreement with all the relevant inclusions. 

    Profile photo of Nu2ozNu2oz
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    @nu2oz
    Join Date: 2013
    Post Count: 11

    I was just about to post a similar question.

    In the USA this is a more creative way of working with the vendor, using an "option to buy" instead of an outright sale & purchase.

    I'd be interested to hear if other investors in Australia use this method, who they use to draw up the contract(s), and the workflow they use until the property is reno'd & sold.

    cool

    Profile photo of Nu2ozNu2oz
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    @nu2oz
    Join Date: 2013
    Post Count: 11

    Bump! (Do we do this on this forum?)

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 11,992

    Yes we certainly do that on the forum. 

    Sometimes some of us older hands are too busy to answer every post.

    Certainly try to offer some useful imput when we can.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of tommytuckertommytucker
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    @tommytucker
    Join Date: 2010
    Post Count: 82

    No experience here but it sounds like a winning strategy to have up your sleeve.

    Profile photo of Ryan McLeanRyan McLean
    Participant
    @ryan-mclean
    Join Date: 2010
    Post Count: 547

    I don't know what everyone else's experience is but the Australian market seems to be a bit more "straighty-180" than foreign markets.

    It would be hard to offer a standard vendor this "renovation JV" and have them say yes.

    You would need to be able to prove your track record of success and make the deal very beneficial for them.

    I am assuming you are only splitting the profits of the property, not the sale price? Meaning you would have to get valuations done at the beginning of the project.

    What happens if the deal goes south and there are structural issues you weren't aware of and the property makes a loss? Then who forks up the cash.

    What is the vendor decides not to sell after the renovation (as they probably have the power to do so).

    Lots to think about. You would really need to understand the laws around it and be a good salesman to convince someone to do it.

    Ryan McLean | On Property
    http://onproperty.com.au
    Email Me

    Profile photo of justahousewifejustahousewife
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    @justahousewife
    Join Date: 2012
    Post Count: 6

    Charlie123. Do not be dismayed ! What you are suggesting is more than viable and essentially simpler that you think.Although do not underestimate the attention to detail that is required.

    1. You first step is to get agree ance with the buyer, with what you want to achieve – who gets what and when

    2. Then you go to an experienced vendor Finance Lawyer IN YOUR STATE and get them to draw up the paperwork to protect both your self and the seller.

    I believe you can go to the Vendor Finance Association website and ask who the lawyer for your State that is associated with them (www.vendorfinance.asn.au)

    People are more agreeable than you think , as long as you consider their needs and concerns as well as your own.

    Profile photo of BoughtWithEquityBoughtWithEquity
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    @boughtwithequity
    Join Date: 2013
    Post Count: 68

    I've been a life-long contractor in the states…4th generation actually….and I've done a few deals over the years where I essentially partnered with a hamstrung owner who needed to sell but needed the repairs completed in order make the best sale.  I have usually done these as a simple joint venture and we would usually agree on the "as-is" price the property would sell for then draw up a contract for repairs.  The JV agreement would stipulate how we would be splitting the profits on the sale which was usually 40% for me….60% for them.  I've done a few of these and never had any issues although in one case, I did file a lien against the property to protect my interests.  I am based in the states and doing a JV like this has become more commonplace for investors as well.  It's a great way to leverage what you know how to do and profit with investing more than the cost of repairs.  Happy Investing

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,110
    charlie123 wrote:
    Hi Everybody,

    Over the years I have renovated a number of properties and flipped them  for a quick profit. I am now looking for another project whereby instead of agreeing to purchase the property, I fund the renovations and do a profit share with the vendor. I can see this being advantageous for the vendor because they will get a higher sale price and also for myself because I don't have to worry about finance and all the associated holding expenses. I am looking for somebody who may be able to share their own experiences with a similarly styled deal or be able to recommend a solicitor that would be familiar with the concept and would be able to draw up the agreement with all the relevant inclusions. 

    Yes, these sorts of agreements can be drawn up – what state ill you buy in? Approx $2k for a tailored JV agreement.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 11,992

    Agree with Terry need Professional advice in order to protect both parties.

    Cheers

    Your in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of MrElmoMrElmo
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    @mrelmo
    Join Date: 2010
    Post Count: 25

    Hello Charlie123, just reading your thread. Were you able to partner with any homeowners and get good results. I was thinking on the same lines. sick of paying stamp duty so will be interest to read about your experiences thanks

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