- jacstarMember@jacstarJoin Date: 2011Post Count: 1
I'm looking at a property in Victoria to develop into 4 units. I can't afford to pay the asking price for the land (around $1m). The vendors are not in a hurry to sell and potentially interested in a JV. I don't think they have any debt on the property as they built the house in the 50's and have lived in it since.
As such I'd like to suggest a JV whereby we agree a purchase price to be paid upon completion of the development (when the first sales settle), and we split the development profits 50/50 (or something). The point for me is to develop the site and make a profit with very little money down. My question is how the details of this scenario work, does anyone have experience of this set up?
My specific questions are –
1. How would we structure the contract? as individuals or create an entity to do the development?
2. When the vendor gets paid out for the land at the end of the development would we still be liable for stamp duty?
3. I've read that the landowner puts up the land as security for the development loan, then the developer obtains the finance and does the development (and gets paid a development management fee). So, who pays the construction loan deposit and is there a way of doing this without using my money?
If anyone has recommendations of a good property lawyer experienced in JVs in Victoria please let me know.
Thanks.TerrywParticipant@terrywJoin Date: 2001Post Count: 16,213
1. You could do this a variety of ways, Joint Venture agreement is one. You or your entity contracting with owner of land.
2. Yes, if there is a transfer in title
3. this will be tricky as the land is owned by someone else. Likely that it will be messy.
I am just advising on a vic JV right now.Ryan McLeanParticipant@ryan-mcleanJoin Date: 2010Post Count: 547Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024
You will not be able to finance a construction loan component without the existing owners being a party to the new loan and that they may not wish to do.
Couple of considerations but can be done with care.
Yours in Finance