Sign contract and resell before I have to settle??

[bananas]

Hi guys,
My apologies if this has been answered before. I used the search tool and it came up with HEAPS of threads. I scoured them and can't seem to find what I'm looking for.

I'm in Qld and trying to get a deposit for my first house or investment property, don't care which. As you know, a large chunk of money is hard to come by, so I'm thinking that I could sign a contract, with (maybe) a 60 day settlement, and early entry, and do a light reno and resell it before I have to finance the whole deal. Pull my chunk out and be able to buy my first house.

My question is; is this doable in Qld? Are we allowed to do a double close (as the Americans put it) or is this illegal?? Instead of a double close, what about onselling the contract?

I have faith in my ability to locate a suitable property and not get stuck having to finance it, and am willing to take on that amount of risk.

Please help!

 

[bananas]

Oh and that's my other question; am I able to advertise the property myself once I've signed the contract to purchase? (I know you can't advertise a property that you don't own unless you are an agent)

 

[Tony3008]

So what happens - unlikely I know - if your vendor dies before settlement; AIUI this voids the contract and you have no redress. Where would that leave your purchaser who has a contract with you? IANAL.

 

[bananas]

So what happens - unlikely I know - if your vendor dies before settlement; AIUI this voids the contract and you have no redress. Where would that leave your purchaser who has a contract with you? IANAL.

Hmm..interesting point, thank you. I'd never thought of that. I wonder if that would void the contract with MY purchaser?

 

[willair]

Hi guys,
My apologies if this has been answered before. I used the search tool and it came up with HEAPS of threads. I scoured them and can't seem to find what I'm looking for.

I'm in Qld and trying to get a deposit for my first house or investment property, don't care which. As you know, a large chunk of money is hard to come by, so I'm thinking that I could sign a contract, with (maybe) a 60 day settlement, and early entry, and do a light reno and resell it before I have to finance the whole deal. Pull my chunk out and be able to buy my first house.

My question is; is this doable in Qld? Are we allowed to do a double close (as the Americans put it) or is this illegal?? Instead of a double close, what about onselling the contract?

I have faith in my ability to locate a suitable property and not get stuck having to finance it, and am willing to take on that amount of risk.

Please help!

In the right time in the cycle you might be able,but put yourself in the vendors mindset,60 days is no problem,cost of reno,insurance,the "ATO'
agents fees,stamp duty,i just don't think it would work,a few years ago maybe..

 

[bananas]

Thank you willair. I will do all the math well in advance of signing my contract, and if it doesn't add up, then I'm won't proceed
I agree that it would have been much easier to do a few years back and am kicking myself now in hindsight

 

[Propertunity]

My question is; is this doable in Qld? Are we allowed to do a double close (as the Americans put it) or is this illegal?? Instead of a double close, what about onselling the contract?

This is legal. It is commonly achieved thru the use of a call option or a put & call option. (This saves you paying stamp duty on the whole value of the property, but you still pay on the option premium).

Have a read of this thread:http://www.somersoft.com/forums/showthread.php?t=70976

Also do a search on the forum here, google site:somersoft.com "put & call"

 

[bananas]

This is legal. It is commonly achieved thru the use of a call option or a put & call option. (This saves you paying stamp duty on the whole value of the property, but you still pay on the option premium).

Have a read of this thread:http://www.somersoft.com/forums/showthread.php?t=70976

Also do a search on the forum here, google site:somersoft.com "put & call"

Thank you very, very much Propertunity!

You have given me the EXACT info I was after. Happy new year to you!

 

[Propertunity]

Thank you very, very much Propertunity!

You have given me the EXACT info I was after. Happy new year to you!

Cheers.

 

[RightValue]

The problem with your strategy is if the property does not sell inmmediately.

Your reno will probably take 30 days, then if you sell the purchaser probably will not be able to settle in less than 30 days.

Even if your reno only takes a fortnight to do, then say the property does not sell in the first couple of weeks??

Most properties take more than a month to sell at a fair price at the moment. Like I said the purchaser still has to get finance approved, documents printed, then errors to the documents fixed, then and settlement booked in by the bank, all this is not fast.

Plus what haoppens if you to get a purchaser prepared to settle at the same day and then they delay settlement on the day, in Vic this can be 2 weeks without the contract being rescinded.

It is fine IF you have the funds in place, either loan or cash in case things go wrong but if you do not then you could be wiped out, your renovation reverts to the vendor who possibly sells the place at a higher price.

IMHO in the current market you need at least 180 day settlement to do this and still be able to settle.

What will you do if there is a market shock and a slump or no one is buying whilst you are renovating or the property value has fallen or your cosmetic reno (in reality a redecoration not a renovation) adds very little value and you can only get offers $10k less than what you paid for it?

At best you may probably make $10k profit above costs less agents commission (yes you will have to pay a commission to them which could be 2% +, plus advertising) on a redecoration at the moment.

Still all the above aside , its a great idea in theory ................

 

[RightValue]

oh yes, another thought.

What if you write into the contract that you get access, but the vendor changes their mind or their solicitor insists on signing something else. It may not cancel the contract but could delay your access for a month.

 

[vaughan]

The other challenge is getting the vendor to agree to the call/put option INSTEAD of selling you the property outright.

 

[Terryw]

oh yes, another thought.

What if you write into the contract that you get access, but the vendor changes their mind or their solicitor insists on signing something else. It may not cancel the contract but could delay your access for a month.

The terms of the contracts are negotiated before siging. So if the vendor won't allow something you can walk away or agree to that or maybe negotiate further.