Hi everyone,
With the turn in the finance market I've become unable to fund a duplex DA I have in Sydney. After a rather nasty spat between the builder and myself re the start date of the building contract and the inability to show funds to complete Ive thought of a new way to sort it out and would like others experiences and opinions prior to approaching the builder.
At the moment the site is worth 500k with a debt of 400k. House is renting at 29k PA.
The contract for the build is $415k + $50k for landscaping and finishing items.
The builder has said his profit on the deal is $70k from the $415k contract.
My idea works like this, due to my lack of funding ability I dont want to pay another cent until completion. The builder fronts all build costs and subdivision costs to enable the sale of the properties. Now the benefit for him is outlined below.
Original Contract to build $415k = $70k profit
My idea is he sorts out the funds for the build (415-70) 345k +50k for completion = $395k
On completion the builder is given ownership of one of the duplex's current value is $640-$650k
deal one is - 70k profit to the builder with no risk
deal two is - 240k profit for fronting 400k and building the duplex
Any thoughts on this?
Cheers
Andrew
I can hold the property as its cf+ my issue is a breach of contract and possible legal action up to 70k from the builder + legal fees. The above "deal two" increases my equity position 20%, removes any legal risks and allows for a win/win for both parties? Thats how I see it anyway.
With the turn in the finance market I've become unable to fund a duplex DA I have in Sydney. After a rather nasty spat between the builder and myself re the start date of the building contract and the inability to show funds to complete Ive thought of a new way to sort it out and would like others experiences and opinions prior to approaching the builder.
At the moment the site is worth 500k with a debt of 400k. House is renting at 29k PA.
The contract for the build is $415k + $50k for landscaping and finishing items.
The builder has said his profit on the deal is $70k from the $415k contract.
My idea works like this, due to my lack of funding ability I dont want to pay another cent until completion. The builder fronts all build costs and subdivision costs to enable the sale of the properties. Now the benefit for him is outlined below.
Original Contract to build $415k = $70k profit
My idea is he sorts out the funds for the build (415-70) 345k +50k for completion = $395k
On completion the builder is given ownership of one of the duplex's current value is $640-$650k
deal one is - 70k profit to the builder with no risk
deal two is - 240k profit for fronting 400k and building the duplex
Any thoughts on this?
Cheers
Andrew
I can hold the property as its cf+ my issue is a breach of contract and possible legal action up to 70k from the builder + legal fees. The above "deal two" increases my equity position 20%, removes any legal risks and allows for a win/win for both parties? Thats how I see it anyway.