Tenant asked to buy - game plan!

[DavidMc]

I would be asking the tenant what they were willing to pay. Just to make sure they were serious and weren't just kicking tyres.

I had originally thought of that, but then figured it would be better to start at a higher price and move down, than a lower price and move up... what do others think?

 

[wylie]

I had originally thought of that, but then figured it would be better to start at a higher price and move down, than a lower price and move up... what do others think?

You don't need to sell so start high and allow yourself to be talked down.

 

[WattleIdo]

I disagree.

Years prior I asked them to find me a tenant, and I paid them a fee for this. I never asked them to find me a buyer, discussed any payment or anything like that.

After this time, I have formed a relationship with this tenant (as their landlord), who is now a asking to buy.

Have made three offers to my landlord - obviously doesn't want to sell. The tenant has probably just gone through the REA so as not to be a pain to you but would also prefer you to just sit down and talk and negotiate.
No doubt your tenant has also done a few valuations and looked around and is aware of what a fair price would be. You have the advantage of knowing that your tenant genuinely wants to buy and probably has the finance sorted already.
I guess I'd ask her to put an offer in writing and ask her whether she's ready to go. Of course her offer will be the lower side of what she's willing to pay. Then I'd start talking. I'd just get straight to the point about what you want for the property - market value plus a little more, or maybe just market value. That's fair.
Good one.

 

[kathryn d]

I don't see the point of selling.

To buy another property, don't you pay stamp duty, legal fees etc all over again?

Why bother....if you want money..take out equity

 

[Rixter]

I don't see the point of selling.

To buy another property, don't you pay stamp duty, legal fees etc all over again?

Why bother....if you want money..take out equity

Good call unless he's has no access to existing equity and/or doesnt meet DSR/LVR or its a lemon anyway

 

[DavidMc]

I don't see the point of selling.

To buy another property, don't you pay stamp duty, legal fees etc all over again?

Why bother....if you want money..take out equity

Very good point Kathryn. In fact, I had this exact thought last night. The property has great fundamentals and I've held it for 7 years. It's performance has been non-existent for the first 5 but a sale in the block last month has shown it's done well recently.

My main reason for thinking of selling it's the cashflow. It's been a thorn in my side as it's very negative. (although to be fair, I bought it with 5% down in the height of the boom... never again!

The second is the trust structure I used, while all legal and above board, attracts heat.

However you do have a point... And paying down some debt here would just be like saving for that next deposit. I could get better yield somewhere else, but I'd have to cover all the transaction costs before I'm ahead (which are significant).