Owners Interested In Renting Back

Asking price $480-$515
My max $450
The rent in the area for equivalent is $430 week.

Any innovative techniques that would be a win win for the both of us ??
 
Just be careful if you wish to claim the benefits of negative gearing. You must charge market rent to gain full deductions.

So if you buy at a lower price by including in the deal a period of low or no rental you will not receive tax benefits. You will also have a lower cost base for CGT when you come to sell.
Marg
 
Just be careful if you wish to claim the benefits of negative gearing. You must charge market rent to gain full deductions.

So if you buy at a lower price by including in the deal a period of low or no rental you will not receive tax benefits. You will also have a lower cost base for CGT when you come to sell.
Marg

Are you suggesting paying more for a house to lower your CGT when you sell ?

If not, why would that be a concern, it is true, the less you pay for something, the lower your cost base is, but why does it need mentioning ?
 
Asking price $480-$515
My max $450
The rent in the area for equivalent is $430 week.

Any innovative techniques that would be a win win for the both of us ??

Do you mean asking price is 480-515k and you will pay a max of 450k??

If the rent is only $430/wk, their upper range may be a bit out, what area is this in? Also, what reason have they given for renting back? Knowing this can assist in any negotiations...
 
What about delaying settlement instead?

ie secure the price you're prepare to buy it for, then have a delayed settlement.

This way they dont need to pay rent, you arent liable for anything, you dont need to worry about paying interest (which is better for you if the place is negatively geared).

If its positively geared then its a different story.
 
Thanks for the feed back !!

Going to view the house this weekend, will find out more details. The house is in a new estate and looks like its been built by the owners.

Delayed settlement sounds like the way to go, but I am assuming that they might need the money to :
Pay the bank
De-force
Their next investment build and sell.

Each will have its own angle for my first offer :confused:
 
Delayed settlement could work if

1. They were looking for a new home and wanted to sell the old one before committing to a new one.
2. They are in a fixed loan (because breakcosts suck).

This way they can have their cake and eat it too.

They have a sense of security as the place is already sold.
They can live in it until they find a new place.
They have have a simultaneous settlement (ie the settlement date of new property matches the old property).

But if they want the money for investment, then i dont think it will work.
 
You need to find out if they want a quick settlement or a delayed settlement. Offering a delayed settlement could back fire if they want a quick settlement. They may have a huge mortgage over the property so need a quick settlement.
 
The house is in a new estate and looks like its been built by the owners

This is a red flag for me. New estates are generally associated with families buying/building properties on urban fringes, because they are more affordable. How many others may be in the same position in the same estate A few properties for sale in the estate, may have a significant impact on price. And 'generally' they are the first to bear the brunt of any economic slowdown, given their social demographic.

Of course none of this may apply in this case - your due diligence will confirm this.
 
How long do they want to rent back for?

We settled yesterday and the vendors had are renting back off us for 4 weeks while they renovate their new place, which they also settled on yesterday.

Given the short period of time, we had our solicitor draw up a license agreement, and rent monies and bond were taken out at settlement. Our agreement also covered OFI's.

Cheers
Buddybee
 
Spoke to the agent last night about the sellers situation :

The sellers more than willing to be flexible and reasonable with all solid qualified offers.

1. The sellers do not necessarily need a quick settlement. Please let me know what your situation is, and what your preference is.

2. The sellers have indicated to me that the option of renting back of an investor purchaser would be something they would be interested in. Fitting in with their future plans, a twelve month lease arrangement would be feasible for them.

3. In regards to an extended settlement, yes they are open, I just require further detail from you.


Will be going to an open house on Sunday to see if the web pictures match the actual house as I find the wide angle lenses can do wonders for a room.

The suburb is 24km from Perth CBD (Joondalup city) with all the infrastructure around it including 2 Uni's a Police academy, and a new automotive college being constructed.

Now were do I start the negotiations with the asking price at $485-$515?
12month settlement at $500
6 month settlement $470
4 week settlement $455

The rent expected will be between $400-$450
The growth rate 12%
Its like a game of poker just dont want to show my hand to early.:cool:
But will need to start with somthing :confused:
 
that is betting that worse case scenario is a 10% increase in 12 months.

At a rent of $400-450 i would be lloking to purchase in the $300's. Does this block have any development potential or a pure buy and hold?
 
12 month settlement don't pay any interest for 12 months saving about $20,000
The property increases in value 10% about $50,000 or worse case 6%=$30,000

So this time next year will have a property valued between $548,00-$565,000 and only paying $514,000 for it, and saving interest payments for the year.

The owner happy they got there full asking price !
I'm happy I got a $565,000 house for $514,000 come Feb 2011:D

The property is a buy and hold new house low maintenance good deprecation.
 
Well congrats on the purchase :)
I woulda tried to drive a harder bargain - you were giving them favourable terms, hence a discount is appropriate, even with a 12 month settlement ;)

Worst case 6% CG? That's pretty optimistic for a worst case scenario...hopefully you do get good CG though as the bank val would be higher = less money from your pocket :)

*sidcount = discount :D
 
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Not got the property yet just trying to work out were to start the negotiations.

What's a sidcount ? I'm still coming to terms with all the abbreviations on this site.
 
Not got the property yet just trying to work out were to start the negotiations.

What's a sidcount ? I'm still coming to terms with all the abbreviations on this site.

Tripped me up for a second...... then I realised it was a slip of the fingers...... discount.
 
worse case scenario is -10% CG - now you have something valued @ $450k you have paid $500k for and is negitively geared? Not trying to be a party pooper but 6% CG as worse case is optimistic imo.
 
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