Hubby & I were recently renting a large house in great location 5 mins to Perth, belonging to his parents.
House was built circa 1910, jarrah floorboards throughout, double brick, high ceilings, feature fireplaces x4 etc. Has a 1950's style extension on it. Awful bathroom and kitchen but these things can be fixed. Good bones I think and definately huge potential. Outdoors has no landscaping to speak of, just some neglected plants (oops !) and a pagola that is due to retire in 3 years or sooner.
Currently not living there but have a business operating out of one half so I am still renting the entire premises.
In-laws have expressed interest to sell to us in the past (By Vendor Finance) but at that time we were not in a position to purchase. Now, since I have alot more education on property/investing I would like to take action and DO something with this property.
I was considering the following scenario:
Hubby and I buy 1/2 share from in-laws by Vendor Finance (I dont think we can afford full value).
We renovate interior and landscape (maybe in laws can put $ into this with us, have not decided)
Sell with sale price split 50/50
(reason I think we should split 50/50 even though we supply money for renovations is that we have been living there for stupidly cheap rent for 8 years and I think we owe them some exchange!Hubby is a tradesman and I have various contacts so we would project manage renovation and do some hands on aspects ourselves (fit kitchen, electrical wiring, painting, only the stuff we are confident & familiar with).
Not sure how we would legally structure all this and if we should seek property legal advice from someone? I basically want to have all data to hand to supply in-laws with a presentation and complete research that is fair and worthwhile outcome for all involved, for them to consider.
Has anyone here done something similar? Anyone got any ideas on things I have not considered? suggestions? opinions?
all feedback and comments welcome.
Azalia
There are problems with buying half. How do you fund it? If borrowing, then your in-laws will have to go on the loan with you too. This can get messy.,
If you are just going to sell why not just keep it in their name and then have a written agreement to split the profits on sale. saves on stamp duty and loan hassles. But you will have to check the effects of CGT – but they will probably have that anyway if they were to sell to you.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terryw,
Your right, I am seriously overcomplicating it!
Better just to come to some private agreement about us adding value then sell and split profits proportionate to what value we added.
When they first approached us about Vendor Financing it, they were going to loan us the money from their company (property in the company name also).
Thanks for your help!
Azalia
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