First time land developement , a couple of questions .

[mitch]

Gday,

an opportunity has presented itself in which l may obtain a 1/3 investment in a land subdivision.

l was hoping some of you that had done that sort of thing may be able to advise me on how the process may work.

Things like how do three of us protect our part of the investment and errors , mistakes and misunderstandings that may happen over the next 12 months , that being the time frame estimated from settlement to selling blocks.

My share of the costs will all up be 300 to 350k.

l was wondering if one of our finance wizards could show me a couple of ways to have acess to these funds a bit at a time as l dont need all the money at the start.l have plenty of equity to spare but my serviceability may be an issue.

Regards Mitch

 

[Michael Yardney]

Gday,

an opportunity has presented itself in which l may obtain a 1/3 investment in a land subdivision.

l was hoping some of you that had done that sort of thing may be able to advise me on how the process may work.

Things like how do three of us protect our part of the investment and errors , mistakes and misunderstandings that may happen over the next 12 months , that being the time frame estimated from settlement to selling blocks.

Regards Mitch

You should protect yourself by having a partnership or joint venture agreement that clearly defines each parties, rights and obligtations and how you handle matters when things go wrong. You should get a solicitor to prepare this.

e.g. How many of the 3 partners have to vote on various scenarios? Can the other 2 gang up on you and vote you out?

You should also protect yourself by having your name on the title of the property

 

[RPI]

Is this a one off or could it happen again?

I would go further and look at using trust structures. The three of you could form a partnership of your 3 trusts, or you could use a unit trust to do the development and each of your trusts buy units in trusts.

Consult an expert regarding this. Nick M or Dale GG are the forums structuring experts. Many peopole use them even though they are in different states. I don't know where you are but I have a great accountant for asset protection and structuring in Brisbane also.

My only regret with property investing is not getting my structure right in the first place. I have some properties outside trust structures and would cost me well over 100K to get them into the right structre, so I'm stuck.

Good luck

Darryl

 

[mitch]

Gday Michael and Darryl,

Thanks for your advice.

l lost the SANF on this one and have decided to go after a developement l can finance on my own.

Regards Mitch

 

[Hernan Crespo]

Have just been doing some research into financing recently and there are some non-conforming lenders out there that will lend you up to 75% of the final valuation of the project on low or no-doc loans.

Naturally the interest rate is higher and so are application fees. Interest rate is generally around the 10-12% figure and application fees are about 1%-4% of the loan.

Too bad i left things too late for my project for the financing, went to traditional banks and bombed out based on serviceability and then these lenders just appeared on the horizona little too late and the seller was unwilling to extend my finance period.

Cheers,
Crespo