Put/Call Options - No money down - Need Advice

[Sanctuary1]

Hi everyone,

Newbie here. I hope you are all well

I was hoping you guys could help me. I'm currently stuck between a rock and a hard place on a couple of deals I have in the pipe line and it basically comes down to this.
- My 'clients' won't commit to an option if there is no buyer already lined up and I'm running out of developers/contacts who may be interested or who won't try and advise me that a JV would be better.

What do you think I could/should do? Your thoughts would be greatly appreciated

Thank you
Nicole.

 

[Terry_w]

Sounds like you may be a new graduate of an expensive course?

Are you trying to on sell the option before settlement? This will be extremely difficult. Firstly it will be difficult to find a vendor to accept an option. If you can then you must find a new purchaser of the property within the settlement period - which is also hard.

The only thing you can really do is to reduce your profit and/or try to get longer settlement periods.

 

[RPI]

Terry

I am so used to the script now when I get a phone call that I could almost pick the course provider.

I and my clients use options like this regularly, however, we put money down and tend to use them to secure property prior to getting DA etc.

Better bet is normally a long contract with a due diligence clause, scares vendors less.

 

[handyandy]

Hi Terry

Has something happened to your account? It's indicating that you joined on March 2012!

I am sure that you have been around longer than 2012

 

[Terry_w]

Hi Terry

Has something happened to your account? It's indicating that you joined on March 2012!

I am sure that you have been around longer than 2012

Yes, I am the artist formerly known as Terryw

 

[Aaron_C]

No money down.....means no money out.

 

[Sanctuary1]

Hi guys,

Thank you for the input. Terry nope no course, self taught by the good ol internet and networking. Essentially that's the idea, on selling, unfortunately I dont have large amounts of capital behind me hence the theory of on selling options. I have had a draft layout completed by a surveyor for these blocks and quotes done for infrastructure design.

 

[see_change]

Hi guys,

Thank you for the input. Terry nope no course, self taught by the good ol internet and networking. Essentially that's the idea, on selling, unfortunately I dont have large amounts of capital behind me hence the theory of on selling options. I have had a draft layout completed by a surveyor for these blocks and quotes done for infrastructure design.

Maybe you should consider a JV. Post a synopsis of what you're suggesting .

50 or 20 % of something , is better than 100% of nothing

Cliff

 

[Sanctuary1]

Hi Cliff

I'm looking at 4 individual titles that total approx 7.9ha of land zoned R2 low residential.

The 4 land owners however, seek top dollar for their land and it's contingent on them selling as a 'group'. With that said I am between 2 situations. I have an associate who works with Beechwood who is interested in doing a JV as a private venture and has made an offer but then I'm still looking at options to make sure my interests are covered as well

Your thoughts?

 

[Aaron Sice]

no exit strategy is no exit strategy. they have obviously read the contract with the "right but not obligation to purchase" and wanting you to line up a purchaser to obligate you to exercise the contract.

gee....who'd'a thunk they'd read it, eh? you'd think they'd just have stars in their eyes at the cash you were swinging at them....

a simple unit trust as purchase, and onselling the units, may have sufficed; but then....that's free, publicly available information....

 

[Sanctuary1]

Aaron thanks for the moral support. You are quite rude. If you don't wish to contribute and help, Don't comment.

 

[Terry_w]

Hi guys,

Thank you for the input. Terry nope no course, self taught by the good ol internet and networking. Essentially that's the idea, on selling, unfortunately I dont have large amounts of capital behind me hence the theory of on selling options. I have had a draft layout completed by a surveyor for these blocks and quotes done for infrastructure design.

Good to see you didn't waste $6,000. You just have to keep trying I suppose. Ask for longer time periods. I went to a seminar yesterday and they said the average time to sell a property now is 32 days after listing, auction sales passed the 80% mark in Sydney last weekend too, so it is becoming easier as the market heats up.

 

[Sanctuary1]

Hi Terry,

Thank you. I had pitched a 12-18mnth settlement. Idea was to provide enough 'fat' to get all the paperwork complete. 12 months appears to be good with vendors, 18 months throws them off (mind you these blocks are in a new release area so services have to get put in) so it's proving to be a bit tricky.

 

[grantwhit]

a simple unit trust as purchase, and onselling the units, may have sufficed; but then....that's free, publicly available information....

Is stamp duty payable on the transfer of the units?

 

[Terry_w]

Is stamp duty payable on the transfer of the units?

Depends on the state of the trust, and maybe property. In NSW it would be a dutiable transaction and duty payable at 0.60%

 

[Aaron Sice]

Aaron thanks for the moral support. You are quite rude. If you don't wish to contribute and help, Don't comment.

rude? what?

you've just outlined another reason why options dont work, regardless of the sell.

it was a dig at the people running seminars about this stuff and those that follow, starry eyed, into the sunset. i have a sordid history with a well know options educator that most know about, but yes i will admit you may not have known that.

the first paragraph is aimed at your question. the rest is waffle.

i am blunt, yes...but rude?

 

[billybrownless]

a word of wisdom

in every transaction there is a loser....and a winner.

with options trading the breakdown is

a) winner = presenters who charge obscene fees for attending
losers = attendees

b) winner = attendees who manage to execute an option
losers = seller of the property and the prospective buyer

 

[grantwhit]

Depends on the state of the trust, and maybe property. In NSW it would be a dutiable transaction and duty payable at 0.60%

So what is the main benefit of onselling units once you have got a DA on a place? Is it that the buyer saves on stamp duty?

"Structologist" - you should TM that one Terry

 

[Sanctuary1]

rude? what?

you've just outlined another reason why options dont work, regardless of the sell.

it was a dig at the people running seminars about this stuff and those that follow, starry eyed, into the sunset. i have a sordid history with a well know options educator that most know about, but yes i will admit you may not have known that.

the first paragraph is aimed at your question. the rest is waffle.

i am blunt, yes...but rude?

Hi Aaron given that I don't know you nor your sordid history, I read your post and sensed a lot of sarcasm so with that said yes it was rude to belittle my attempts to seek advice on a topic that obviously does not sit well with you.
I can move past that though as although you are 'blunt' you appear to know your property and all genuine forms of advice from you and others is greatly appreciated.

You obviously don't like Options. I can somewhat see why as I've read about/heard of groups like Mass Land and Carly Crutchfield but I've also spoken to Developers who use them regularly but they are not/and I'm not expecting them to spoon feed me so I have opted to self educate.

So alternatively what are your thoughts on JV's or what would you suggest?

 

[Terry_w]

So what is the main benefit of onselling units once you have got a DA on a place? Is it that the buyer saves on stamp duty?

"Structologist" - you should TM that one Terry

Depends on the situation.

It generally saves stamp duty, allows units to be sold to a SMSF (in some situations), allows title to remain in same name, allows property to be gradually transferred etc etc.