Options

[Guy]

I'm currently looking to buy a couple of adjoining properties in my area to develop.
I've heard of the use of options & presume they are a contract to tie up the property for a time without actually purchasing - is this correct?
Could someone explain some detail?
Where would I source a good contract?
How much would I look at paying the vendor for the rights?
Any one had experience/s using them?
Thanx

 

[geoffw]

It's probably most thoroughly covered in The Australian Lease Options Handbook - $129 for hardcopy, or $79 for an electronic copy.

 

[Simon]

Guy,

I am in Newcastle.

Give me a call and I will have a chat about how some colleagues and I secured a property for development on a refundable deposit.

Cheers,

 

[MichaelM]

Hi Simon,

Any chance you could give us all a quick run-down of the option and how you negotiated the deal, via the forum?

Mick.

 

[Simon]

OK Michael I will have a crack at it. It's a tragic saga of unrequited love but I will try to stick to the relevant technical aspects.

Put it quite simply a block was located which was significant size to be dual occupied with subsequent torrens title split. Council tentatively indicated that this sort of proposal would be appropriate and supported.

An offer was submitted to the vendor with a $1000 deposit and one of the conditions was subject to successful DA through council. Settlement was arranged for 14 days after the DA was approved. Of course if the DA was not approved then the deal was off and the $1000 was refunded. We paid the vendors asking price as a sweetener even though the property had been sitting on the market for a while. We poss could have saved $5000 or so had we negotiated with a normal contract.

The risk was the costs for DA. We had building plans drawn up, council fees paid and an accoustics report commissioned. This was because an airfield nearby had us under a flight path. Whilst we heard horror stories of additional $15 000 per home in sound proofing the actual requirement was about $2000 in extra thickness glass for certain aspects. No big deal at all. All up there was about a $6000 investment which would have been lost had the DA been refused.

There it is in a nutshell.

 

[MichaelM]

I'm interested in doing something similar myself should I find a suitable development site.

Thanks for sharing that with us Simon, the willingness of people to share their experiences makes this such a great forum.