Introductions

We are both retired and living on a pension. We don't have the funds for the development.

 

Understood. So you bring to the table the land. A developer brings to the table money to knock down your house and build three houses. You get one of these houses. Is that all you are going to get i.e. no additional cash?
How much could you sell the property for now?

 

We don't have any contracts yet. But our understanding is that our costs to the developer would be for the build of our home, after the sale of the 2 town houses. The developers cost to us would be for 50% of the balance of the 2 lots of land that the 2 townhouses will be built on. All costs and profits associated with the build of the 2 townhouses would be divided 50%.

 

Maryanne, I reckon we need to talk in terms of dollars and not percentages.

- If you sold you home now what would you get for it?
- What would your new home on a smaller block be worth in two years when the development is done?
- How much will you pay in rent for those two years?
- How much money will you end up with when the other two dwellings are sold?

Of course, they are all going to be estimates, but if I was contemplating this sort of speculative project I would be thinking in dollars.

 

My primary concern would be what would happen if the developer went bust. There's a few tracts of land in Hobart for sale with previous approval for units now on the market. A former school site was to be developed, now the bank are selling it. It that happens, what then?

 

We're not in a position to borrow funds, as we are living on an aged pension.
We have now decided to sell and move to a new area. As the whole process of a joint venture is not as smooth as we anticipated. We would like to thank everybody for their valuable feedback.

 

Yep, good decision Maryanne. If you had gone ahead you would have had many sleepless nights and it all could have gone pear shaped in the end.