Redevelopment Proposal

Have a scenario I need some advice on in my hometown of Perth

Bought a 2bd unit for $200k and a developer has come in and offered $400k to acquire it, this is a $100k premium for what it's worth now.

OR they have give us the option for a brand new 2bd unit in the new building worth $600k on completion (going by current market estimates). They'll buy out our mortgages first, and then add them back onto the new build. It's 2 sites to be amalgamated, and they'll have to demolish our building for the build.

Face value makes sense to hold, but anything can happen, what do you guys think? Big risks to watch out for? Any advice/thoughts appreciated.

 

If you sold it and bought a similar one nearby would you come out ahead/?

 

Not in the timeframe it would take for the project to be completed (est 3yrs)

 

so title would only transfer in 3 years if sold today? I assume the money only then too?

 

I think we would sign a binding agreement with the developer and would wind up the strata plan and create a separate company with each owner as shareholders, I assume the developer would retain majority interest in this new company as they have "acquired" the site (need to confirm this point).

For those who want to sell - they would exit first (not in 3 years), for those who stay - they would end up with the new units in the development (in 3 years)

 

Just been told buyout premiums would be subject to DA being obtained, so there's some time before a decision is made then on whether to buyout or exchange units.

I think everyone will sign the binding agreement to proceed with the project.

 

An option without payment ? In 2 years time they tell you...yeah nuhhhh. The $100K offer is just bait. He baited and switched and now throws the low risk option at you. He needs all the units. Not 9/10.

I cant even fathom how this works
hey'll buy out our mortgages first, and then add them back onto the new build.

 

Sorry can you please expand on what you mean with this point? Interested to hear your thoughts, we only have the 2 options on the table: be bought out or exchange for brand new unit

My understanding with buying out our mortgages is that we enter into a binding agreement , wind up the strata plan and for those who have a current mortgage e.g. $150k - this gets paid out, and then once the new build is complete, it gets added back on. So instead of having a place worth $300k and $150k mortgage, we have a new place worth $600k with $150k mortgage