Artifically increasing the rent

Fork, add legal fees into finding out if the dodgy deal is doable as well and it really isn't worth it.

A number of has said that it's a fraudulent misrepresentation but I don't see Georgie paying any attention.

Georgie1, go do some actual work on your property and reap the rewards of an honest days 'labour'. Don't blame your situation (which is entirely voluntary!) on other generations methods of gaining money.

I for one, hate whingers, who whinge that people/generations who negative gear have artificially increased housing prices. Who was going to provide rental accomodation to millions of Australia if there was no incentive? If we can't negative gear then we should be able to charge rent at what the property costs us - helloooooo $1000 rent for a 2 bedroom apartment.

You yourself are trying to artifically inflate your own property - get out of the glass house before you throw your artifically inflated rocks.
 
Heck... why stop at $150 per week. Why not give the current tenant $20K and inflate the weekly rent to $1500 per week. You could probably sell it for $200K more than it is worth :rolleyes:.

You'll have 'em lining up round the block.
 
To dodgy for me to contemplate.

If you did go through with this scheme you are going to have one unhappy buyer when he goes to renew the tenants lease in 12mths and your Tenant refuses to pay $1000 any more. I would think that he would consider a civil case against you. I most certainy would.

Can the buyer sue? I would have thought not. The seller has no obligation during the sale to guarantee rents.
 
The Buyer can sue. If you buy a purchase with a tenancy contract in place you inherit the contract. As such the Buyer is then legally bound by the Tenancy Contract.

If they find out that the Tenancy Contract is false they will firstly try and sue the Property Management (who are being duped by Georgie) and then go after Georgie.

Tonight's favourite dream will consist of Georgie giving her new Tenant $10k and then one month later when it comes time to pay rent again, the Tenant going "what $10k?" and disappearing off into the sunset.
 
The property is currently gettin $850 a week. Properties that rent for $1000 are selling for more than 30k-50k than a comprable of my style of property. I just want to bump it up to $1000. Its not as if this is a low end property getting $300 and I am trying to inflate by more than 50%.

I should clarify, highest rental achievable is $850 for my property. Properties getting $1,000 per week are in better condition but not a better location.

*snip*

Georgie1, I think you're looking at this from the wrong end. The properties renting for $1000 and selling for $30-$50k are not comparable to yours. They are in better condition. You said it yourself.

The only (reasonable) way you can increase your sales price is to improve the condition of your place. As someone else mentioned, spend the $10k on that - all things being equal, you'll get a better end result, IMO.
 
if you put a long lease in you cut out a large proportion of the market, ie owner occupiers. Cut out this market and its a great way to lose $$
 
I plan on selling my investment property within the next 3 months and my property is about to become vacated. It will most likley be purchased by another investor so is it worth me giving the next tenant a 12 month lease and $10,000 via a private deed in exchange for lifting the rent $150 extra over the market rent. The $7,500 will cover the increase and the other $2,500 will keep the tenant quite during the marketing process.

Looking at comparables this should easily add an extra 30k-50k in value.

I was wondering if this is illegal as this practice always goes on in commercial property.

Thanks
I'll leave the ethical or legal aside of this specific scenario and focus on the rent. When you are trying to appeal to the investor market having a property under rented is a mistake.

> Still have a shorter lease even though you are sure it will sell to an investor, an owner occupier might want to buy and an investor might want to have it vacant to renovate, so shorter lease or periodic if not selling vacant.
> Furnished, good way to legitimately add a healthy margin on the rent
> Add services such as lawn mowing/ garden maintenance to the lease in return for higher rent, this can result in an extra $20 a week for example so even though the net return is the same the gross yield will look much better to a buyer.

I recently bought a property for an investor that was rented for $380/wk, tenants vacated during the purchase process and the property was promptly rented for $450/wk without any changes, having the property rented for $380 definitely hurt the sellers and their bargaining position!
 
I should clarify, highest rental achievable is $850 for my property. Properties getting $1,000 per week are in better condition but not a better location.

Also the selling agent won't know, I won't tell him so there is no need for him to lie.

I would say its a small risk for me to pay. If i don't get the inflated price I want then I will continue to rent it for the year at a cost of $2,500 to me. If it sells at 30k-50k above market value to the investor then I think its $2,500 well spent.

There are no laws broken seeing as no one has pointed them out so I could not be sued.
Wowzer... I hope I come across someone as yourself early in my overall business/investing life so that I can pick up on your dishonesty (and ignorance), so I learn to avoid doing business with people like yourself in the future.
Good luck with it.
 
I plan on selling my investment property within the next 3 months and my property is about to become vacated. It will most likley be purchased by another investor so is it worth me giving the next tenant a 12 month lease and $10,000 via a private deed in exchange for lifting the rent $150 extra over the market rent. The $7,500 will cover the increase and the other $2,500 will keep the tenant quite during the marketing process.

Looking at comparables this should easily add an extra 30k-50k in value.

I was wondering if this is illegal as this practice always goes on in commercial property.

Thanks

This is a stupid idea on so many levels...

  • What normal tenant is going to agree to this for an effective 5% reduction in rent for one year with the promise they are going to have to pay 18% over market rent after a year, or more than likely have to move?
  • How are you going to advertise the rental? I doubt any agent would go along with this scam and include it in the add. If you don't disclose it in the add then you're never going to rent it as you are way over market rent.
  • Every post in this thread thinks it's dodgy. You'll find it very hard to find a tenant to agree. If you do, they will likely be a 'professional' renter who thinks they have won the lotto - take the 10k, don't pay rent and then blackmail you if you try to enforce your rights as a LL (this is the outcome you deserve).
  • IMO it's immoral and an ethicist would likely conclude it is unethical.
  • All the reasons other posters have stated.

I like Wylie's idea, if you're going to commit fraud then should be thinking bigger...

You should dodgy up a contract for $1500pw with a friend or relative and get the extra $200k. Between sale and settlement get your friend to lodge and win a tribunal hearing to break the lease. Cheaper and with bigger benefits.
 
Fingers crossed that if you go ahead with your plan, you pay the tenant the extra $10K, and that you then fail to sell. This is most likely what will happen as a purchaser will go to the open house down the road and see what the extra money will actually get them.

Plan for it to be a long time on the market!

Maybe losing $10K will be a lesson you need to learn.
 
IMO the suggestion in the OP is morally/ethically on the fence and doubt that it's something I would do, but how is it different to:

- Developer offering temporary rental guarantee (at rate above market price)
- Seller failing to divulge serious structural flaws (and buyer doesn't do building inspection)
- Seller does cheap cosmetic renovations to property (e.g. repainting without doing proper prep work, so doesn't last)

Buyer should be doing their own due dilligence.
 
Fingers crossed that if you go ahead with your plan, you pay the tenant the extra $10K, and that you then fail to sell. This is most likely what will happen as a purchaser will go to the open house down the road and see what the extra money will actually get them.

Plan for it to be a long time on the market!

Maybe losing $10K will be a lesson you need to learn.

Dodgy Dodgy Dodgy..............you really are "destined for Failure" with an attitude to even contemplate this.Are you really fair dinkum? :confused:
 
The property is currently gettin $850 a week. Properties that rent for $1000 are selling for more than 30k-50k than a comprable of my style of property. I just want to bump it up to $1000. Its not as if this is a low end property getting $300 and I am trying to inflate by more than 50%.

Why have you been renting the place out at $850 when you could command $1000, or are the ones commanding $1000 better properties?

If the others are better properties, 'inflating' the rent on your property won't change the fact that your house is not as good as these other properties.

If that isn't the case then just lift the rent and get it to market - you have up to 3 years. Much simpler to do than what you're proposing.
 
Doing the maths if the OP increased the rent by $10,000 and his MTR is 37%. Provided he makes full disclosure to the ATO (although given the nature of the OP its unlikely). the OP would lose out on $3,700 in tax rebates/additional tax payable. Add that to the $2,500 hush money, the cost of this exercise is $6,300 for 12 months.

so that's $6,300 spent for a 30-50K "Potential" price increase.

yeah morality aside that's worth it I suppose.... but given your current rental returns of $850 pw I'm guessing the property your selling is going to be worth around the $900K to $1M mark?

what potential investor sinking $1,000,000 into a property isn't going to do DD on the property, a quick RE.com search would show what the real returns are.

I'd much prefer to spend the $10K sprucing up the place.
 
Have seen this attempted in commercial properties, generally by owner occupiers selling with lease back. The rent is higher than market to attract investors, generally at a slightly higher yield, but also at a higher value. Leases are generally shorter term (3 years max) and invariably you know they will vacate or seek to negotiate an early exit from the lease, which may already be written to allow this prior to purchase.

I don't know what % of these have sold and for what price. Its based on the same tactic however.

I still believe more savvy buyers would be able to see through the veil of higher rent. If that is the price for the property (~$1m) I am assuming (without knowing any detail) its going to appeal more to an OO though? If an investor wants a property purchase for that amount, they wont be looking for resi or they will be looking for a lower price point. The premium will be paid for by OOers.
 
putting aside the moral aspect,

if you are worried about giving them $10k in case they run away with it

what about something like, rent of $1000 per week, for every week that you pay, I will give you $150 back,

then you dont have the risk of defaults,

but the next question will be, how many tenants are going to see the agreement and think WTF!
 
True. But you only need one idiot to buy.

I am grinning and nodding as I read this. Too true, and our so called best advice and commentary here all goes out the window if someone is prepared to stump up the cash and has a bank happy to fund the mortgage.

Of course sometimes, finding that one person may have some implications with respect to time. Time is often undervalued too.
 
Have seen this attempted in commercial properties, generally by owner occupiers selling with lease back.

....this is the key....

The Seller needs to be the Tenant for it to work.

The Seller controls every step of the way, via the terms in the Sales contract. Everything is stitched up well and truly prior to the schlump Buyer coming along who afterwards turns into a schlump Landlord.

Obviously in this scenario, there is no 3rd party (existing Tenant) to let the cat out fo the bag.

Owner wishes to sell their office. Fair market rent is say 60K pa.

They put the thing up for sale, with a fresh 2+2+2 year Lease with rent set at 80K pa.

The place is only worth 600K on a 10% yield basis.....so they pop the rent up to 80K pa and ask 800K for the place, then sit there and wait for the schlump Buyer.

If one gets hooked, they get an extra 200K in the sale price, and only have to fork out 40K over the first 2 years of the term. The options available to them never get taken up and they leave after 2 years.


Your scenario about renting a private residential place with 3rd party Tenants involved is a totally different kettle of wax.
 
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