Can anyone suggest a solution to this - neighbour selling house and empty block.

This may turn out to be totally theoretical.....but......

Here's the situation -

One of my neighbours and her brother, both in their 60s, live together. Their mother used to live there too, but she died 2 months ago. Now they have to sell the house and an adjoining empty block, as they have 5 other brothers and sisters who want paying out from the Mum's estate (she owned them both outright).

The value of both as one auction lot is likely to be $1.5 million. The sale value of the 2 blocks, subdivided and developed, is likely to be $3 million. There is obviously the build cost in the middle.

I would love to find a creative solution where they could stay in their family house, and still pay out the other 5 siblings, and if I could benefit financially too, that would be a bonus. I am not a developer though and do not wish to get involved in developing the site.

The properties are not yet on the market officially.

Does anyone have any suggestions / wild ideas?

Cheers

JB

 

They can purchase both properties - get a loan for three quarters of the value of $1.5 million and use that to pay out the siblings.

Once owned they then create value out of the land by proceeding with the subdivision themselves.

Start off by recommending them to a mortgage broker who knows about real estate and the subdivision development process so they can work out how much they can borrow and what they can do.

I will do this as a first step before looking at joint ventures and stuff because otherwise they will lose the profit they stand to gain from this inheritance.

 

If they are in their 60's with no background in developing, and you have no wish to get involved in developing, and there are 5 siblings wanting to be paid, I think selling is the easiest option. I have seen sibling estate property matters cause conflict before and it can get ugly. It would be risky and possibly impractical to get a large enough loan for someone with no knowledge or experience to pay out the others up front and then fund development, unless their income is very solid which I doubt from the sounds of things.

Unless they can find a JV partner who has experience with this willing to fund the DA, and they split the profit, but even then the siblngs are gonna have to wait and they wont like that.

 

Depending on the terms of the will, they could borrow to buy out the shares of the other parties. This could be structured to avoid stamp duty and possibly CGT too.

But it may be difficult to finance.