Hi all.
I need expertise and your experience on how to deal with the tenant when I’m applying for my IP to be subdivided.
If council approves, the plan is to sell the existing house and build a new house on the land and we will rent that house for a period of time.
My IP in Sunbury – bought for $212000 Apr 08 now worth $290000 and mortgage balance of $204000. (Cnr block looking at subdividing)
I see Sunbury as the main cash / equity start to really use these principles of investing as it should give us a block of land to build a new home on, rent out and then sell the existing house. Should leave approx $60,000 cash plus approx $120000 equity on new house/land if all goes well. From there, this will give us a good start in approx 12mths time to invest more seriously.
To successfully subdivide I will need to demolish a large brick BBQ which sits under an 8m gable roof. She will also lose a great deal of backyard.
It’s also likely that she will not afford the higher rent of the new home as it will be approx $50/wk higher than what she pays now, so possibility that carrot for her may be off the table to move into the new home. So depending on the new owner of the existing house she maybe out of a house yet the location really suits her.
What problems could I face with her through this process and what strategies can I use to help her through my objective to minimise or cancel her objections.
I also have the option to move into the IP house myself after giving her formal eviction notice. I know that I will need a quantity surveyor and approved valuations to fix the price of the home for CGT if I move in. What else re tax etc, I’m not sure on.
You probably want to keep this tenant in the house as long as possible, yes? Keep the income flowing while you build the new house? If so, is there any reason why you can't explain to her what will be happening, and see what she says? If she complains about losing the backyard, maybe knock $10 or $20 a week off the rent…
When it comes time to sell the property, it will be more attractive to an investor if a tenant is already in place…
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Yes, bear in mind too that sub-divisions can take 12 months minimum to even be approved. Therefore any lease in place now is likely to be expired by the time the machinery arrives on site to dig sewer & water lines etc.
Just let the tenant know when it is likely to being close to being started and she can decide if she wants to move or stay on at a reduced rental.
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