Hey all, hope your well!
So I’m having trouble with this next property purchase. Owner verbally agreed to offer however has not signed the contract as he is having trouble moving his tenant (his mum).
Now he wants to negotiate keeping his mother as an ongoing tenant, and my main concern is what if she stops paying rent (doesn’t seem like she can afford market price). What are my options?
The rental agent has suggested the following:
– Have the son/current owner, sign up as the rental person
– Removing tenant using judiciary if she doesn’t pay rent (12weeks lead time)
– Sign up to 3 month rental period, if she doesn’t pay can bypass judiciary and speed up the process.
Would rather things work out well, yet am mindful of a possibly messy outcome. The property even with 12 weeks loss of rent etc, is actually still more than worthwhile.
Thoughts? Win-win Option suggestions?
Thanks for your help!
If you do take 'mum' on as a tenant make sure you have a formal lease agreement in place. This will give you some protection should the wheels start to fall off. Ensure you have a say in the length of any lease agreement – do not let the son sign up mum for the rest of her natural life.
This is your investment so set it up the way you want – if the requests are too onerous be prepared to walk away.
Get an independent rent assessment – you may well find the son is under-renting to his mother too.
Without meaning to sound harsh it sounds as if you are letting your emotions be manipulated – do you really want his property? If the answer is 'yes' then make sure you are emotionally able to manage your investment.
Hi Derek, thanks for the reply!
No attachment, just trying to learn from this experience, have already place offers in for other places and currently focused on a construction project.
Tho in all honesty, $330k (total costs) for 2 properties on 1 title with a rental return of $600 and the potential to place a granny flat at $400k (total) with a rental return of $800 is still upseting to let go of :p
Actually quite amusing, nobody has seen the owner in 2 weeks now, it's like he vanished off the face of the earth.
NHG- I think what Derek was saying about emotional attachment was that you would need to be prepared to treat the property like a business and forget any 'humanity' issues- i.e. if the Mum stopped paying rent, then you would need to be able to stay emotionally detatched and evict the poor old lady onto the street even if she has no where to go. If you can't do that then you may find you lose big time as you get taken for a ride.
But seeing as you have already decided not to pursue the house then I guess it is irrelevant.
Cheers,
LukeOh i see,
Yeah, facing that issue now, tenant in another property is 5 weeks behind, agent was taking them to tribunal next week. Feels cold, though I get what your saying.
Worked something out with them however, they are paying current rent and are slowly making up lost rent. (Win-Win?)
Thanks guys!!!
I suggest you get both to sign the lease. maybe evens suggest they let you take some rent money at settlement – 6 months in advance??
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
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