Hello
We're just finishing up the renos on our PPOR ready to sell to start our investment portfolio.
We love the house and were going to rent in the same area anyway.
So, what if we rent back our home, surely having a 5 year lease signed would boost the sale prospects.
Now, my question is this. Do we try and hide the fact that the lease is with us or do we promote that fact?
ie Do I get a 5y lease signed up with a relative who then sub-leases to us,
or do we advertise "5 year lease with tenant who treats the place like home" and after some interest let them know the tenant is us,
or do we advertise "vendor to lease back for 5 years"Thanks
KentonYou have to be careful renting to relatives as the tax`department has a requirement that some transactions are done at arms length rather than to close friends, relatives, ect.
I myself like the idea of complete honesty / disclosure with {or do we advertise "vendor to lease back for 5 years"}
it probably would work better if you had some agreement with a real estate agent for the rent agreement as you can then advertise what the rent income will be and that a bond will be paid. Another selling point could be to offer to pay the first 12 months of rent in advance.I nearly did rent a property back to a vendor when I purchased a property but the selling real estate agent mucked up by taking too long to organise this rental agreement and they moved out.
It is similar to buying real estate with the tenant already in the house on a lease.
Hi, I did that & sold immediately to an investor. You need to offer terms that make sense to an investor.
Eg the rent is much higher cos it's pegged to the price. Say I want $335000. The usual rental is about $290-300 pw. I offered $350 pw paid monthly interbank.
I look like a fool paying $350 to live in my own house & taking $280 from my tenants. I built 4 new houses you see.
But the opposite picture is this. I borrow $225000 from the bank to live in my own house. I'd be paying 9% x $225K + I'd have to do the curtains etc + I'd have to pay rates + insurance [non tax deductible]
The buyer doen't need to pay mgt fees & I'm absolutely dependable when it comes to paying the rent on time.
The quick transaction gave me time & confidence because I didn't have to force sell the other properties.
A yield of around 5.4% with depreciable fitouts will make sense.
Good luck,
Kum Yin
You must be logged in to reply to this topic. If you don't have an account, you can register here.
