Buying high rise and sell before completion.

Discussion in 'Innovative Property Investment Techniques' started by Frank Manno, 23rd Mar, 2017.

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  1. Frank Manno

    Frank Manno Well-Known Member

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    Hi everyone.

    Someone today told me how they are buying off the plan high rise units in Sydney in very expensive areas $1m+ per unit and putting down 10% deposit.. with a 4 year completion date and selling closer to the date.

    Any opinions on this?


    -Frankie
     
    Frank Manno, 23rd Mar, 2017
    #1
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  2. Ouga

    Ouga Well-Known Member

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    "Trying is the first step towards failure" Homer
    It's pure speculation.
     
    Ouga, 23rd Mar, 2017
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  3. Redwood

    Redwood Well-Known Member

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    Frankie

    I would not do that. If you are lucky to make money, the contract may stipulate that the developer keeps the profit.

    Cheers Ivan
     
    Redwood, 23rd Mar, 2017
    #3
  4. ashish1137

    ashish1137 Well-Known Member

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    Run away
     
    ashish1137, 23rd Mar, 2017
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  5. Ace in the Hole

    Ace in the Hole Well-Known Member

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    More risky than train surfing while wearing a blindfold.
     
    Ace in the Hole, 23rd Mar, 2017
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  6. highlighter

    highlighter Well-Known Member

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    Nooooo don't do it.
     
    highlighter, 23rd Mar, 2017
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  7. Stoffo

    Stoffo Well-Known Member

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    Due dilligence :)
    There may be area's with little other development or competition now, that may also change by completion :rolleyes:
    By and large a "good developer" will have writte into the contract that YOU have to settle it and can't on-sell prior to completion :p
    (* l have one settling 3rd quarter this year and am still very :D )
     
    Stoffo, 23rd Mar, 2017
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  8. Frank Manno

    Frank Manno Well-Known Member

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    Oh well there goes that idea.. lol

    Thank you everyone for your input.


    -Frank
     
    Frank Manno, 23rd Mar, 2017
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  9. Ted Varrick

    Ted Varrick Well-Known Member

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    Sure, why not? And maybe they should use deposit bonds as well, so then they can buy 10 times as many...
     
    Ted Varrick, 26th Mar, 2017
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  10. MTR

    MTR Well-Known Member

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    Definitely a speculator not an investor, started a thread on this:)
     
    MTR, 26th Mar, 2017
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  11. hash_investor

    hash_investor Well-Known Member

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    10% of a mill is a lot of money
     
    hash_investor, 27th Mar, 2017
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  12. Simon Hampel

    Simon Hampel Founder Staff Member

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    Have a read on Henry Kaye ... this is basically one of the strategies he was promoting in his expensive seminars.

    Buy developer stock in bulk "at a discount"; secure with minimal deposit (deposit bond or bank guarantee); on-sell before settlement; profit.

    Works in theory until you can't sell, then can't get the finance to settle, nor can you afford to hold the property you didn't actually intend to buy in the first place. It's all happened before (around 15 years ago!).

    There's an awful lot of assumptions in the strategy - you'd need to make sure you have multiple exit strategies in case any of the assumptions turns out to be invalid for whatever reason.
     
    Simon Hampel, 24th Apr, 2017
    #12
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  13. Poppy

    Poppy Well-Known Member

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    It's too late in sydney for this as we at hitting peak now

    I did this 3 times on units off the plan from 2010 onwards and doubled my money before settlement! Decided to keep flats instead of flip (I ended up getting finance approval. A place sells better when it's completed, and finally all the places are cash flow positive!!)

    If I'd done this in Melbourne it probably wouldn't have worked. I know sydney very well and it had been dormant for 7 years when I started buying OTP

    Even better several developers took 4y to complete, and I was able to reap that cap gain without laying done much at all!

    Barangaroo buyers have done very well on this strategy

    I used it as I was on Mat leave and couldn't get finance!
     
    Poppy, 8th Jul, 2017
    #13
  14. JKWS

    JKWS Well-Known Member

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    Why not just goto the casino and put all your money on Black?
     
    JKWS, 8th Jul, 2017
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  15. Poppy

    Poppy Well-Known Member

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    Lol. I bought in places in sydney with extremely low stock and no new places. (On Hyde park and in neutral bay)

    It wasn't west end Brisbane or docklands Melbourne. I love property and in 20 years of investing have never had a loss. Had bad experiences but never a loss.

    I bought in a rising market.
     
    Poppy, 8th Jul, 2017
    #15
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