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Land Leases

Discussion in 'Investing Strategies' started by Tom&Don, 12th Jan, 2006.

  1. Tom&Don

    Tom&Don Active Member

    16th Aug, 2005
    Question to the more experienced investors, and any solicitors out there.

    What is the prevalence of land leases in Oz?

    Eg ..

    I buy a block of 12 units for $1M.

    Scenario A)

    I Sell the BUILDING to a developer to renovate or detonate/rebuild
    I Retain the land and the builder pays me rent for the duration of the project

    Scenario B)

    I Sell the LAND to a lazy investor for 800K (Cos thats what its worth) and then I pay them 7% rent p.a.

    I sell the building to a sophisticated investor (For 300K maybe) looking for good cashflow, with a 100% vendor finance term for 20 years, at 8% p.a.

    I get all my money back (and a little extra cos I negotioate good) AND I pocket the difference between my finance rates and the interest I charge.

    Either way - I guess what I'm asking is - is it easy enough to split the land and building components for on-sale?