Allowing vendor to rent property after exchanging contracts?

I’ve negotiated a 90 day settlement with the vendor. The vendor has accepted on the condition that she can rent the unit out before settlement. I’ve agreed to this on the condition that the rent is a minimum of $x p.w and that I have input into the selection of a suitable tenant.

I think it’s a positive thing (it means that a tenant will already be in place upon settlement, paying rent that I would have aimed for). Is there anything I’m missing here? Is there anything else I should consider?

Cheers

Jamie
 
Am I right in assuming that your intention was to have this as an investment property and not move in any time in the near future?
 
I’ve negotiated a 90 day settlement with the vendor. The vendor has accepted on the condition that she can rent the unit out before settlement. I’ve agreed to this on the condition that the rent is a minimum of $x p.w and that I have input into the selection of a suitable tenant.

I think it’s a positive thing (it means that a tenant will already be in place upon settlement, paying rent that I would have aimed for). Is there anything I’m missing here? Is there anything else I should consider?

Cheers

Jamie

You may have missed the point that you don't own the property until the vendor has been paid in full. You say you won't be paying for it until 90 days, so what's the question again?
 
Hi Finspec,

Yep it's an IP.

Sunfish,

I understand your point. But why would the REA even bother to tell me that the vendor wanted this as a condition on the contract?

Jamie
 
Mortza,



Things to consider:
1. you could be settling a house full of undesirables.
2. they might sign a 10 year lease at current prices - which you will need to honour
3. you may have difficulty getting access for pre settlement inspections
4. Does the contract specify vacant posession? They may decide not to leave anyway (had this happen to a friend - delayed settlement for months!)

etc

Cheers,

The Y-man
 
Nope, I've got another PM lined up take over the place once we settle.

I've stipulated in the contract that the rent must be at least $250 p.w (which is what I would have aimed for) and that I have input into tennant selection.
 
That's what I don't understand: You said you have input into tennant selection, and the vendor herself puts condition to rent the place.... so, where's the "tennant selection" option?
 
Hi Andrew,

The vendor has asked if she can place a tenant in the property (because the 90 day settlement on a vacant property will chew into her funds).

I've said yes.

On the condition that the tenant pays at least $250.00 p.w (market rent) and I get to have input into the selection of the tenant.

Cheers

Jamie
 
Make sure that the lease isn't too long, as Y-Man has said, and I'd also get a clause in there that if there's any tenant-caused damage to the property between now and settlement, that the vendor has to sort it out with the tenant or compensate you, not leave it for you to sort out. I'd consult your lawyer about any clauses they recommend to protect your position - I bet there are other potential pitfalls that we've not thought of.
 
Thanks for the response Ozperp - more things to consider.

On balance, I still feel it's a positive thing. If, touch wood, the tenant is decent and is paying market rent before I take over the property than that's one less thing I have to worry about.
 
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