Offer to buy now, or in 3 years at same price
- Thread starter jackbak
- Start date
Definitely.
Without knowing the full details I would buy now.
However:
If you can get an option to purchase the building in 3 years time and only need to pay $21,000 ($7,000 over 3 years) knowing full well that if the market drops further that you will pick it up for less then I say take the option. Wording of the option is very important.
It is not a simple question as there is more to it.
However:
If you can get an option to purchase the building in 3 years time and only need to pay $21,000 ($7,000 over 3 years) knowing full well that if the market drops further that you will pick it up for less then I say take the option. Wording of the option is very important.
It is not a simple question as there is more to it.
Easily answered. Will the property value drop by more than the 7k per year you save in rent? Are you willing to take that risk?
I'll be the devil's advocate. If you & the lessor have a falling out between now & 3 years & the value increases substantially between now & then do you think the deal will proceed?
To throw something else into the mix, is the depreciation over 3 years more than or closes the $21k gap?
To throw something else into the mix, is the depreciation over 3 years more than or closes the $21k gap?
Thanks locko24, that's exactly what I'm trying to find out and why I'm asking for people's opinions.
Great points Scott! I hadn't factored depreciation into my budgets as yet, it's a new build (2 years old) so depreciation will definitely come into it. Will need to speak with our accountant and see if their are any other tax incentives/disincentives.
Three years is a long time for relations to change so if there's substantial good will at the moment and it looks like you are being offered most of the upside then perhaps it's worth looking at locking that upside in with a call option, not a put/call but just a call so that you aren't tied in if there's downside movement, try and get it for as cheap a fee as possible 
Three years is a long time for relations to change so if there's substantial good will at the moment and it looks like you are being offered most of the upside then perhaps it's worth looking at locking that upside in with a call option, not a put/call but just a call so that you aren't tied in if there's downside movement, try and get it for as cheap a fee as possible
I hear what your saying, landlord is a friend and a lovely bloke but anything can happen in 3 years...
I don't believe that is legal...
It is since the property is a commercial one. It would be illegal if it was a residential security.
