Real Estate
BUYING REAL ESTATE
Real estate provides excellent opportunities to invest Trade Dollars into property that will generate cash profits in the long term. Real estate isn't a particularly liquid asset, but real estate becomes more valuable over time and provides an excellent inflation hedge and tax shelter. Since Trade Dollars come from selling surplus or from additional new business and have a low incremental cash cost, many investors find that they can be more aggressive in pursuing investments such as real estate.
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Because Contrabart members can earn Trade Dollars without significantly affecting cash flow, investors can buy speculative properties and wait for values to go up. In some cases, it's even possible to walk away with a pocket full of cash.
Even if the investor is forced to sell at a paper loss, the sale can still represent a cash profit. Here's how it works. Let's say a business has an incremental cost of 35 percent in its Trade Dollars.
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The business owner buys a property for $500,000 with 30% Trade Dollars (T$150,000 + $350,000 cash), so the total cash cost in the property is $402,500. If he sells the property for $455,000 cash, he has still doubled his cash investment while reporting a $45,000 loss on his taxes. The ATO doesn't care whether you pay for the property in cash or Trade Dollars. The reportable loss is still the same.
You can still buy real estate, including property, homes, units, even though you don't have sufficient trade available to pay for it. Trade exchange members have recently purchased units in Sydney, townhouses in Southport, waterfront acreage at Hervey Bay, an office building in Brisbane, and a resort in tropical North Queensland. These transactions ranged from $300,000 to over $4 million. Typically, the buyer paid between 25-30% part payment in Contrabart Trade Dollars. Where a member does not have sufficient Trade Dollars Contrabart may be able to offer you an interest-free line of credit - this could give you the opportunity to purchase a property today at today’s prices without major cash outlay.
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A recent property sold was a luxury Townhouse in Sydney. The property market in Sydney was slow so the developer decided to sell the property accepting Trade Dollars as part payment. Because he had a need for the Trade Dollars, he was willing to take 30% of his equity in the Townhouse in Trade Dollars. The asking price was $500,000. The equity of $150,000 was paid in Trade Dollars; the balance of $350,000 was paid by obtaining financing with a bank mortgage.
If you would like to learn more email us at: info@hemphillproperty.com.au
SELLING REAL ESTATE
Contrabart offers vendors a cost-effective marketing strategy that can achieve a quick sale and is more likely to achieve the asking price as the purchaser is already receiving a discount by using trade dollars as part of the purchase.
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By marketing your property through Contrabart your listing has the potential to attract the attention of thousands of business owners - many of whom are looking for investment properties.
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For property developers selling a new development off the plan, initial sales through Contrabart can set high benchmark prices as Contrabart members, by leveraging their gross margin when using Trade Dollars to purchase property, are generally willing to pay the asking price.
From a developer’s point of view, selling property on Contrabart can assist with pre-sales of their development to source finance and reduce holding costs, sell slow-moving stock and maintain their margins.
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Using Contrabart as a marketing tool can also reduce the number of unsold units at the end of otherwise successful development. Also, other major advantages to vendors are that sales can be achieved without excessive marketing costs, and also they can use Contrabart to sell the harder to sell units in a development.
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The function of Contrabart is to market a seller’s property to members and introduce the buyer. Contrabart does not participate in the negotiation process between buyer and seller.
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If you would like to learn more email us at: info@hemphillproperty.com.au