Introductions

Discussion in 'Introductions' started by Maryanne, 13th Mar, 2018.

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  1. Maryanne

    Maryanne Member

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    Hello, we are new here and seeking advice. We have been approached by a property development group to develop 2 town houses and a new home on our property. All costs would be covered by the developers. Our home would have to be demolished and we would have to relocate during the build. The cost of our new home would be taken out of the sale of the town houses. We are seeking advice as to, what to look for in the contract and what pitfalls we may encounter.
     
  2. jefn89

    jefn89 Well-Known Member

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    Definitely seek professional legal advice, aside from there you've got to understand what you stand to gain vs. cons as well.

    All the best! :)
     
  3. KateAshmor

    KateAshmor Victorian Conveyancing Lawyer Business Member

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  4. Ross Forrester

    Ross Forrester Well-Known Member

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  5. Maryanne

    Maryanne Member

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    Will definitely seek legal advice. Looking for advice as to what the cons may be from anyone who has gone through a similar experience.
     
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  6. Maryanne

    Maryanne Member

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    Thank you.
     
  7. The Y-man

    The Y-man Moderator Staff Member

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    I just can't see how you would benefit from the situation.... unless I have misunderstood something.....

    @Maryanne could you tell us (roughly):
    What your current house is worth
    What a brand new townhouse would sell for

    The Y-man
     
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  8. Depreciator

    Depreciator Well-Known Member

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    I'm a bit confused about what you'll end up with.
    Do you just get a new house on a much smaller block of land?
     
  9. The Y-man

    The Y-man Moderator Staff Member

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    That's what I am reading.... you exchange your current house on which 3 townhouses can be built, for a single townhouse and give up 60%+ of the land. Sounds like a scam.....?

    The Y-man
     
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  10. hobartchic

    hobartchic Well-Known Member

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    Why not just sell your house and land to the developer? And then buy what you want elsewhere?
     
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  11. The Y-man

    The Y-man Moderator Staff Member

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    Exactly!!

    The Y-man
     
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  12. Maryanne

    Maryanne Member

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    Thank you for all your feedback. I'll try to explain the situation as briefly as possible. We are both pensioners and have lived in our home for most of our married life. Our home is in much need of repairs and renovation, of which we don't have the funds. We love where we live and don't want to move. Our block is approximately 700sm. Our understanding so far, is that the developer would build a new home for us and 2 townhouses, of which would be sold. The project costs and profit for the town houses would be split 50/50. Our cost to the developer would be for the build of our home. The developers cost to us would be for their portion of our land.
     
  13. Depreciator

    Depreciator Well-Known Member

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    That's a bit clearer, but you'll need to get some numbers. And the developer is going to be a lot more switched on about this than you. There will be tears along the way.
    I completely understand your motivation and your attachment to your home. Except it won't be your home anymore and you might resent the shared block.
    In addition to getting more detail from the builder, you need to talk to a couple of local agents and find out how much you could sell your home for and what you could move into in the immediate local area I.e. downsize. That might be a better and certainly less stressful option to get a smaller home in better condition and pop some money in the bank.
    Scott
     
  14. Maryanne

    Maryanne Member

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    So far we haven't had much luck in finding a smaller home as basically most of the propertys in the area are of a similar size and value. The only other option would be to move to a different area, of which we don't want to do. Getting a new home built on our property sounds like a great idea. But we're also aware, that it's not as easy as it sounds and there are many pitfalls that we may encounter. That's why we're seeking for any helpful information from those who are in the know here and before we seek legal advice.
     
  15. DaveM

    DaveM Well-Known Member

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    Welcome to the forums.

    Playing the devils advocate here, what happens if the relationship with the developer goes south or they shut up shop half way through build or the project loses money. Do you have the funds to chase them in court? If not, I wouldnt get into any shared equity/joint venture scheme
     
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  16. The Y-man

    The Y-man Moderator Staff Member

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    I'll put some numbers in here to illustrate this.

    Let's say your home (land) is currently worth $1m.

    They spend $200k per unit to build.
    They sell 2 for $500k each.
    They give one to you.
    They make 2 x $500k - 3 x $200k = $400k profit

    You now have a home worth $500k (before you had $1m)

    So you have "paid" $500k to have a smaller house on a smaller block of land. Is it worth it to you? You might have a queue of developers lining up to do the deal wit you ;)

    The Y-man
     
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  17. The Y-man

    The Y-man Moderator Staff Member

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    Yep - @Maryanne could end up with a dug up piece of land, and NO HOUSE.

    The Y-man
     
  18. Beano

    Beano Well-Known Member

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    So sell the property for $1m
    Sign a contract to buy one of the new houses for $500k
    so will end up with a new house and $500k
    pay only when the house is completed
     
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  19. Maryanne

    Maryanne Member

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    These are the type of scenarios that we are seeking information on. Thanks Dave for your input.
     
  20. Depreciator

    Depreciator Well-Known Member

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    You're not in a position to do the development yourself? I'm guessing it's not an uncommon scenario for people sitting on a big block of land to do a knockdown, build three dwellings, and either sell two or rent them out for income.
     
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