G’day “SomerSofters”,
Geez it’s been a while since I posted (or even logged in to be honest) but I have a question for those of you more experienced users.
We’ve been trying to sell a house in the ACT since Nov 2011 (We moved out in Dec). The bank payments have been killing me due to the vacancy, so I decided to rent it instead for a while.
A potential tenant has submitted an application to rent and stated that they saw it whilst it was in “SALE” mode. Apparently they can’t afford the deposit to buy at the moment, but said they are willing to rent (for a significantly lower rent than advertised, I might add) with a view to buying. Their offer is a 24 month lease, at a 25% discount in rent, and buying after the 24 months are up.
I’ve always been anti "Wrap / option / weird contract type of deals" at the best of times. Generally if I don’t understand it I stay away from it.
My concerns are:
But assuming the rent could be worked out:
I welcome your “constructive feedback”
Happy Easter and best regards to all
Pedro
Geez it’s been a while since I posted (or even logged in to be honest) but I have a question for those of you more experienced users.
We’ve been trying to sell a house in the ACT since Nov 2011 (We moved out in Dec). The bank payments have been killing me due to the vacancy, so I decided to rent it instead for a while.
A potential tenant has submitted an application to rent and stated that they saw it whilst it was in “SALE” mode. Apparently they can’t afford the deposit to buy at the moment, but said they are willing to rent (for a significantly lower rent than advertised, I might add) with a view to buying. Their offer is a 24 month lease, at a 25% discount in rent, and buying after the 24 months are up.
I’ve always been anti "Wrap / option / weird contract type of deals" at the best of times. Generally if I don’t understand it I stay away from it.
My concerns are:
- The rent in these types of deals is usually higher than market value, not lower. Correct? The assumption being that the excess is put toward the purchase costs or discounted from the final settlement figure (or something to that effect). I’m certainly not renting it for 25% less than its worth. So that’s a deal breaker to start with.
But assuming the rent could be worked out:
- When a Property is purchased under normal conditions It is sold after much building / pest and conveyancing inspection. Effectively the buyer buys what he sees. There is no recourse for after sale repairs or any maintenance. What distinction would exist between standard “Rental Maintenance” and deeper “House repairs”. If I own a house and after 12 months I discover an issue – I fix it. This could be seen in the same light as an interested buyer taking out insurance on a house immediately after exchange of contracts. They have what’s known in the industry as an “Insurable interest”, and I would probably insist that they did.
- During the 2 year period I will be acting in two roles (Landlord and vendor). Could this cause a conflict of interest? (Not sure - just thinking out loud here)
- I would want to have an exchange of contracts completed at the time of entering into the agreement, but they can’t afford a Deposit at the moment, so what chance is there that they will be able to secure finance to effect such exchange.
I welcome your “constructive feedback”
Happy Easter and best regards to all
Pedro