Old owner wants to stay on temporarily...

Bird Dog · 16th May, 2011

Evening peeps.

We settled on our warehouse today and it seems the old owner (who has a collection of classic cars) wishes to stay on for a few months until he sorts out the new premises he's building.
Essentially he's asked for a short term lease that we could end by giving two weeks notice once we find a permanent tenant.

So my question is... what sort of rent per month (% of full lease amount) is reasonable under such circumstances...???

cheers

B.D

pennyk · 17th May, 2011

Why wouldnt he pay the full market rent for that period?

Bird Dog · 17th May, 2011

Hi Penny.

There seems to be no hard and fast rules about it.
I've heard values ranging from 1.5 times the going rate all the way to half..

To be honest, we're not that desperate and my only condition is that he's ready to vacate within 2 weeks once we find a tenant.

cheers

B.D

BuildingBlocks · 17th May, 2011

And what sort of notice period would he be giving to you before moving out?

What access would he provide potential new tenants for viewings?

Do you know roughly how long until his new premises are completed?

Bird Dog · 17th May, 2011

BuildingBlocks said:
And what sort of notice period would he be giving to you before moving out?

What access would he provide potential new tenants for viewings?

Do you know roughly how long until his new premises are completed?

Hi B.B..

Notice period would be 2 weeks from each party.

Full access would be granted to both ourselves and the Agent to show potential tenants through.

New premises should be available in a few months..

cheers

B.D

Andrew_A · 18th May, 2011

Bird Dog said:
Hi Penny.

There seems to be no hard and fast rules about it.
I've heard values ranging from 1.5 times the going rate all the way to half..

To be honest, we're not that desperate and my only condition is that he's ready to vacate within 2 weeks once we find a tenant.

cheers

B.D

For residential I have found this angle can be an excellent bargaining chip, it's almost as if the sellers don't bother to do the math sometimes. I like offering a reduced rent period and getting a lot more marked down off the selling price or more favourable conditions, always done with a proper lease and management in place though.

Bird Dog · 19th May, 2011

Andrew_A said:
For residential I have found this angle can be an excellent bargaining chip, it's almost as if the sellers don't bother to do the math sometimes. I like offering a reduced rent period and getting a lot more marked down off the selling price or more favourable conditions, always done with a proper lease and management in place though.

Hi Andrew.

We're already past the point of bargaining as it settled on Monday (and yes, we got a nice discount based on a few other aspects).

What I'm really after is a suggestion on what is "fair and reasonable" based on a short tenancy, two weeks notice and full access to the agent?

cheers
B.D

Dazz · 19th May, 2011

Bird Dog said:
What I'm really after is a suggestion on what is "fair and reasonable" based on a short tenancy, two weeks notice and full access to the agent?

1.1 x fair market rent
OGs to be paid by Tenant
Security paid of 2 months

The Seller has your money from the sale, so he is cashed up.

Note : There is nothing to say he won't be there 6 months and you won't be able to find a Tenant.

If he doesn't agree, then he always has the option of walking.

Note : Now it is post-settlement, you are in the box seat here. If the Seller wanted a casual leasing arrangement after settlement, he should have negotiated that aspect into the Sales Contract, thereby ensuring you have to play the game. They didn't do that, so now you have the power boot on your foot.

If you don't need the cash rent, it's all gravy from your side. Got to it man. Negotiate your little sox off.

Bird Dog · 19th May, 2011

Dazz said:
1.1 x fair market rent

OGs to be paid by Tenant

Security paid of 2 months

The Seller has your money from the sale, so he is cashed up.

Note : There is nothing to say he won't be there 6 months and you won't be able to find a Tenant.

If he doesn't agree, then he always has the option of walking.

Note : Now it is post-settlement, you are in the box seat here. If the Seller wanted a casual leasing arrangement after settlement, he should have negotiated that aspect into the Sales Contract, thereby ensuring you have to play the game. They didn't do that, so now you have the power boot on your foot.

If you don't need the cash rent, it's all gravy from your side. Got to it man. Negotiate your little sox off.

Cheers Dazz..

That answers my question perfectly...

Andrew_A · 19th May, 2011

Bird Dog said:
Hi Andrew.

We're already past the point of bargaining as it settled on Monday (and yes, we got a nice discount based on a few other aspects).

What I'm really after is a suggestion on what is "fair and reasonable" based on a short tenancy, two weeks notice and full access to the agent?

cheers
B.D

Ok, it does seem strange that he didn't work this out when he had control.

Bon · 22nd May, 2011

It's obvious, you give him a reduced market rent, if not free since he sold it to you at a discount. Be a nice guy, for Christ's sake!

Compropmanager · 23rd May, 2011

I am sure that if you had not have settled on time or delayed settlement the vendor would have charged penalty interest to you so why should he get a discount

Old owner wants to stay on temporarily...

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pennyk

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Bon

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