selling off before completion?

[rodimus]

DO people sell off their construction of a house before completion?

Will this strategy work-
buy land, get builder to build house on it. Sell off to buyer before completion -show them 3d images of end product, give them opportunity to choose their finishes.

[Aceyducey]

Yes Rodimus

This happens regularly. Heard of Off The Plan? OTP

Cheers,

Aceyducey

[Rolf Schaefer]

I am sure this is the preferred way. It gives you a sale before completion, hence, no unnecessary interest payments.

[rodimus]

will the lenders have any problem with that?

I was thinking, if i am taking out a loan to construct, then the progress payment for the builder suddenly switches hand to another buyer... that's fine?

[Aceyducey]

Rodimus,

If you can show the lender that you already have a buyer who's put a deposit down & has a contract in place they'll be much happier!!!

Cheers,

Aceyducey

[Rolf Schaefer]

Rodimus,
selling the property during the construction phase is ok, however, settlement will have to be after the construction is completed.

[rodimus]

I thought we could sell it midway and settle immediately, and the Building Contract switches hand to the new Owner, and they can do variations and change the finishes and carpet to their taste....

That way, I dont have to be acting as a middle man and getting their orders and then telling my builder what to change etc...

[juzz]

I thought we could sell it midway and settle immediately, and the Building Contract switches hand to the new Owner, and they can do variations and change the finishes and carpet to their taste....

That way, I dont have to be acting as a middle man and getting their orders and then telling my builder what to change etc...

Settlements usually happen when the construction is completed & Occupancy permits are issued. There are ways to hold & Collect deposits etc & have agreements for advanced payments but its difficult if you want money until completion.

Sometimes what can happen is that your purchaser for the new contract dosn't settle. You're now holding the baby & are liable in the financiers & builders/developers eyes with your original contractual & financial obligations.

If you have the Loan to construct in your own name or related trust or company name, it would be wise to have the option to roll the constrcution perion lend to an end (Completed) product facility. ie Different LVR. & rates.

You must be able to service it as well for backup if you need to hold it.
If you cant you'll probably be looking for a business type loan facility again, private or 2nd Tier lenders can equate to a different LVR & Rates.


Justin