Has anyone sold to their tenant?

Hi Guys,
I have a question - has anyone ever sold to their tenant (via a private sale) before an agent gets involved?
I just wanted to know how successfull you were - what are the pro's and con's.
I am pondering whether to do this to a townhouse I have in SE QLD...

Pro's - possibly better profit as no agent involved (but tenant would get a slightly lower price too so a win-win situation)
Con's - may upset tenant (who may want a large discount) - who may end up ruining chances of sale if agent becomes involved in selling.
 
I have a friend who bought from his landlord.

There was no benefit in terms of price to the vendor, however there was the benefit of a fast stress-free sale.

Don't underestimate the time value of money, particularly in the present climate.

Cheers,

Aceyducey
 
I have a tenant who wants to buy from mke. I'm not selling- but it's good to know that the property is appealing.

It's a dual occ in Canberra- an excellent site, and very nice gardens- but the buildings do not look very appealing from the outside. The tenant's interest gives me confidence that the property would make a good development- when the time is right.
 
perky29 said:
I have a question - has anyone ever sold to their tenant (via a private sale) before an agent gets involved?
I just wanted to know how successfull you were - what are the pro's and con's.
I am pondering whether to do this to a townhouse I have in SE QLD...


Hi perky29,

First of all I'd say if selling at the moment is part of your overall strategy then selling to your tenant might be a great idea.

The first question I'd ask is, does your tenant have the necessary finances in place? The reason for asking this question is that you might be able to retain some control over the property and without the hassle of actually carrying the mortgage on the property. This can be done through a form of vendor financing where the property is sold now. The tenant buyer may not be in the best position to borrow the necessary amount from the bank (or other financier). The tenant might just need a hand with the deposit. Lend the money to the tenant on a five year term and take a second mortgage on the property. You can charge an interest rate similar to that of personal loans and as you’re helping the tenant out it might give you some leverage to achieve a higher sale price. This situation is one that can be used well in the current market in Brisbane. I have just set this up with one of my properties in Brisbane.

With this approach there is no need to have agents involved, but you will need a solicitor who can draw up the appropriate documents for you and a financier who'll help the tenant with this sort of arrangement.

Good luck with the sale,

AC.
 
Howdy,

Just to note, be careful, if you employ a property manager, then some management contracts stipulate that if the property is sold to the tennant, then the agency gets a percentage (for me it's 2.5%!) of the purchase price.

Sincerely,
Mal
 
Aceyducey said:
Don't underestimate the time value of money, particularly in the present climate.

Cheers,

Aceyducey

Acey,

What is the present climate like? In what market particulary I wonder - units, house in suburbia, waterfront or ocean view? Any specific areas in the SE Qld?

Thanks,
MikeT
 
miket said:
What is the present climate like? In what market particulary I wonder - units, house in suburbia, waterfront or ocean view? Any specific areas in the SE Qld?
Mike,

There are more knowledgeable people than I to answer this question :)

Cheers,

Aceyducey
 
Mal P said:
Howdy,

Just to note, be careful, if you employ a property manager, then some management contracts stipulate that if the property is sold to the tennant, then the agency gets a percentage (for me it's 2.5%!) of the purchase price.

Sincerely,
Mal

Mal,

This is a negioated thing. Next time you go to sign a new contract, or update an old one CROSS THE PARTS YOU DON"T LIKE OUT!
They want your business and will agree.

Jas
 
Aceyducey said:
Mike,

There are more knowledgeable people than I to answer this question :)

Cheers,

Aceyducey

Alrighty,

Just that you said "...particularly in the present climate." So I was interested what you meant. No probs ;)

regards,
Mike
 
Jas said:
Mal,

This is a negioated thing. Next time you go to sign a new contract, or update an old one CROSS THE PARTS YOU DON"T LIKE OUT!
They want your business and will agree.

Jas

I agree with Jas here.

When signing a management agreement with a PM, cross out things you don't like and initial them. They will agree.

A good example is crossing out the 90 days notice required to terminate and change it to 30 days.
 
stanley said:
I agree with Jas here.

When signing a management agreement with a PM, cross out things you don't like and initial them. They will agree.

A good example is crossing out the 90 days notice required to terminate and change it to 30 days.
And also cross out any exit penalties (if they exist). Maybe a penalty within 12 months is fair- but my PM from Hell had a permanent penalty (which I avoided BTW)
 
Howdy,

Thanks for the info guys, next time I'll definately do that. I didn't make a big fuss on that issue this time as this would be a hold long term one for me.

Sincerely,
Mal
 
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