Deals with Builders?

Discussion in 'Development' started by Smee, 2nd Mar, 2020.

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  1. Smee

    Smee Well-Known Member Premium Member

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    Anyone know if builders do deals such as we offer land, they subdivide, build and we split sale of houses? If so, where's the best place to look?
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    Generally not, too much risk for the builder to do it that way.
    Usually you sell the land to the builder who finds a buyer and packages it up as house and land or some variation of that. Such as the builder takes an 'option' on the land - where they pay a fee to you to have exclusive right of sale on the land and have say 90days to find a buyer for the house and land package. You get $x amount for the land at settlement
    Not sure if that's the best/only way to go about it - hopefully someone more experienced replies here.
     
  3. Smee

    Smee Well-Known Member Premium Member

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    That's good advice. Thanks.
     
  4. Angad Singh

    Angad Singh Well-Known Member

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    Hi @Smee,
    This is a typical JV structure between a builder/developer and land owner. Obviously the nuances of the commercial elements (eg. where does funding come from, is the land offered as security against finance, what is the profit split etc) are complex and need to be hashed out.
    If you have well located land, that is a profitable deal in it's own right, there is a reasonable possibility of finding a JV partner. If there is little or no profit in the deal, then it is unlikely you will find a JV partner.
    Cheers,
    Angad
     
    Last edited: 3rd Mar, 2020
    lixas4, Browneyed and wylie like this.
  5. Smee

    Smee Well-Known Member Premium Member

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    Cheers. Thanks for that.
     
  6. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    This is NOT the time to be doing this. Builder goes broke and who loses ?
     
  7. Smee

    Smee Well-Known Member Premium Member

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    The post from the person who wanted to chat has disappeared?? I'm happy to chat.