50% House Purchase with Lease Back

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Dan260
Member
@dan260
Join Date: 2002
Post Count: 22
May 19, 2003 - 1:27 am
Hi Guys,
I saw an ad in the classifieds on the weekend that advertised an investment property for sale in the coastal suburb of North Fremantle in WA. The vendor was selling 50% of his Principal Place or Residence and renting back the sold portion.
I was wondering what other investors experiences in the following questions:
1. Would Investors consider 50% purchases of an investment property?
2. have investors had any experience with a purchase and rent back to vendor before?
I thought that this particular investment would be good as it is quite expensive to get into North Fremantle and also the vendor/ tennant would be willing to sign an atrractive lease for 5years.
But anyway, I am more interested to hear investors thoughts on this type of situation investment.
cheers
Dan
Saskatoon
Participant
@saskatoon
Join Date: 2002
Post Count: 112
May 21, 2003 - 5:39 am
Hi Dan260.
A couple of thoughts:
you will effectively be entering into a partnership with the vendor, presumably as tenants in common. I tend to be very cautious about partnerships, particularly when you are jointly and severally liable for debts!
What happens if you have differing ideas about what should be done with the asset?
What if he sells his share to the “Hell’s Angels”?
If the vendor is married, what happens if there is a divorce and the partner wants the property sold?
What if he/she ceases lease payments – can you evict them from a property that they part own?
Could be some interesting disputes.
YOu would at least need some kind of joint venture agreement with solicitors for both sides etc.
Terry
Terence McMahon
HomeWin
Finance