We have an IP in the Ipswich area that has to be sold by Dec 2007. I have been monitoring alternative strategies such as rent-to-own (r2o) for some time and thought that this would be a good opportunity to try the technique out.
The property is a 6 years old 3 b/r brick veneer DLUG house on 500m2 block renting for $220 pw. We have a tenant whose lease expires on June of this year. The property has been recently valued in the range of $225,000 to $235,000.
Our plan is as follows:
1. Purchase the "rent 2 own" pack from Rick Otton
1. Brief our managing agent for the property on the r2o methodology
2. Give tenant 2 months notice in April
3. Place the property on the market (with our agent) in April as a r2o. Proposed r2o details would be:
i. Lease period 18 months (option can be exercised at this time)
ii. Option price $235,000
iii. Lease price to be set in the range of $300 to $350 per week
4. If there are no sales in sight when tenant vacates in June then the property would put back on the rental market.
The following assumptions are implicit in this strategy
a. r2o will yield a higher price than a direct sale in this market
b. r2o will produce a quicker sale in this market
c. The market in Ipswich is unlikely to move up in the next 18 months
I would be very interested in comments (critical or otherwise) on the proposed approach and our assumptions
Thanks
James
The property is a 6 years old 3 b/r brick veneer DLUG house on 500m2 block renting for $220 pw. We have a tenant whose lease expires on June of this year. The property has been recently valued in the range of $225,000 to $235,000.
Our plan is as follows:
1. Purchase the "rent 2 own" pack from Rick Otton
1. Brief our managing agent for the property on the r2o methodology
2. Give tenant 2 months notice in April
3. Place the property on the market (with our agent) in April as a r2o. Proposed r2o details would be:
i. Lease period 18 months (option can be exercised at this time)
ii. Option price $235,000
iii. Lease price to be set in the range of $300 to $350 per week
4. If there are no sales in sight when tenant vacates in June then the property would put back on the rental market.
The following assumptions are implicit in this strategy
a. r2o will yield a higher price than a direct sale in this market
b. r2o will produce a quicker sale in this market
c. The market in Ipswich is unlikely to move up in the next 18 months
I would be very interested in comments (critical or otherwise) on the proposed approach and our assumptions
Thanks
James