What do you think of this?

[rachels]

We are just waiting on settlement for an IP. We are going to rent it out to the current owner from when we buy it. The vendor has been requesting an early settlement before Christmas but now it looks like we won't be able to until later in January which will still be within the contract time frame. But now the Vendor has requested we please release a portion of the deposit we have already paid as they are in some financial trouble. I had a feeling as they seemed in a rush to get it settled and never negotiated on our offer we made below asking price.

Our lawyer has told us that we will be taking a risk by releasing the money because if the Vendor wanted they could make us go to court to get it back. But the lawyer also said if we say no then we are really saying "we don't trust the vendor" and this could cause problems when leasing or they might not go ahead and rent it out after settlement. This would be not in our best interests as they have offered to pay good rent money and probably over market rates. Then we would have to find new tenants and probably get less rent.

So we offered just a smaller amount so we never refused them but still offered them something. We were hesitant to even do this as we don't have any money left after this purchase so we can't afford to take them to court etc.

I'm just curious to what you would do in this situation? bear in mind this IP is an important purchase and we don't want any problems with the settlement or from we when rent it.

 

[Gools]

How much of the deposit are they after?

I'd be concerned that settlement wont actually go through and you lose that bit of your deposit. Could their financial troubles actually stop the transaction taking place I wonder....

How much above market rent have they offered? If it's not too much then don't let that cloud your judgement.

Without knowing how much deposit you are talking it's hard to know what I would do.

Gools

 

[Propertunity]

bear in mind this IP is an important purchase and we don't want any problems with the settlement or from we when rent it.

EVERY IP is an important purchase and no investor wants any problems

I'm just curious to what you would do in this situation?

Personally I would say NO. Especially if they are not using it as a deposit on another property AND if they are having financial difficulties then other creditors may lodge a caveat on the property making settlement very difficult.

There are plenty of charities that will assist them if they are in dire trouble.

 

[rachels]

How much of the deposit are they after?

I'd be concerned that settlement wont actually go through and you lose that bit of your deposit. Could their financial troubles actually stop the transaction taking place I wonder....

How much above market rent have they offered? If it's not too much then don't let that cloud your judgement.

Without knowing how much deposit you are talking it's hard to know what I would do.

Gools

Well that worries me a lot as we have put a lot into this purchase, i.e research, time, money etc etc over 6 months so it would be a disaster if this fell through. I actually asked our lawyer if settlement can be stopped from the vendors end and they said no as I will still be the owner and I might just have to go through some legal tape but I will still get the property. Now I'm not sure what to think after what you guys have said?

They have offered about 20% more than what I think I could get rented out. I can live with that though as it's in a high demand area and in mid Jan I'm sure many people will be looking to rent so we should be able to get close to what we want.

The amount they requested was less than $7,000 and we offered to release about $2,000 to help them. The deposit was 5% of purchase price (under $300,000)

EVERY IP is an important purchase and no investor wants any problems

Personally I would say NO. Especially if they are not using it as a deposit on another property AND if they are having financial difficulties then other creditors may lodge a caveat on the property making settlement very difficult.

There are plenty of charities that will assist them if they are in dire trouble.

So we should get the solicitor to put in a caveat search in case this happens I guess! Yes well that is what we said to the lawyer, We are Not a Charity.

Our main priority is to not lose out on the property and we get it settled as planned, what should we be doing to secure that?

 

[Propertunity]

Our main priority is to not lose out on the property and we get it settled as planned, what should we be doing to secure that?

You've done all you can do. $2K is not much one way or the other. (It might be a lot to the vendors - just hope it shuts them up for a while).

Relax and enjoy the holiday season. I'm sure your legal people will have it in hand.

 

[The Y-man]

...they are in some financial trouble....

Ok, so they are going to be your tenants - are they going to be able to pay rent??? Hope you lease is drawn up and LL insurance ready to go.

Cheers,

The Y-man

 

[skater]

Ok, so they are going to be your tenants - are they going to be able to pay rent??? Hope you lease is drawn up and LL insurance ready to go.

Cheers,

The Y-man

This was my first thoughts too. If the vendors want to rent the place back, have you charged Bond? Have you qualified them in the same manner as any other tenant? Do they have the income to pay the asking rent? Have they signed a lease? Has an ingoing inspection been done or arranged to be done?

Tread carefully.

 

[vincenzo]

The vendors may just be in financial trouble, from say someone losing a job, or on maternity leave, etc, and may just be downgrading house so they can make ends meet?
They were desperate to sell, maybe they just can't wait for settlement, which may leave them with ~$100k in their pockets, which would mean plenty of cash for rent and for a big deposit/down payment on say a $200K unit, or perhaps a bigger house in a cheaper area, etc..
Or maybe they just need some cash to buy some plane tickets, to escape the long list of creditors which will then all slap caveats on the house

Every property purchase is important to me as well btw But never think that there is only one property out there for you, or only one set of tenants for you! If anything, there's always plenty of properties & tenants out there, that are worth more than the ones we have found

Best of luck, hope it turns out to be something like the former scenario.

 

[rachels]

You've done all you can do. $2K is not much one way or the other. (It might be a lot to the vendors - just hope it shuts them up for a while).

Relax and enjoy the holiday season. I'm sure your legal people will have it in hand.

I found out they just wanted to visit their relation and buy a new car - I think we done them a favor.

Ok, so they are going to be your tenants - are they going to be able to pay rent??? Hope you lease is drawn up and LL insurance ready to go.

Cheers,

The Y-man

Yes I have the agent had a lease drawn up. We weren't going to worry about LL insurance for this property but I might reconsider that now.

This was my first thoughts too. If the vendors want to rent the place back, have you charged Bond? Have you qualified them in the same manner as any other tenant? Do they have the income to pay the asking rent? Have they signed a lease? Has an ingoing inspection been done or arranged to be done?

Tread carefully.

Yes we will charge a bond and inspections will be done before settlement with agent who will take pictures etc. It's a bit hard as they are already living there with furniture there so it's not possible to see every part. We were not going to do any checks as far as I know, so you think we should get the agent to do this?

The vendors may just be in financial trouble, from say someone losing a job, or on maternity leave, etc, and may just be downgrading house so they can make ends meet?
They were desperate to sell, maybe they just can't wait for settlement, which may leave them with ~$100k in their pockets, which would mean plenty of cash for rent and for a big deposit/down payment on say a $200K unit, or perhaps a bigger house in a cheaper area, etc..
Or maybe they just need some cash to buy some plane tickets, to escape the long list of creditors which will then all slap caveats on the house

Every property purchase is important to me as well btw But never think that there is only one property out there for you, or only one set of tenants for you! If anything, there's always plenty of properties & tenants out there, that are worth more than the ones we have found

Best of luck, hope it turns out to be something like the former scenario.

We asked them what the reason for selling was when we first viewed the property and she said her and a friend were going to buy a property in Italy, where she is from. Yes the plane tickets and taking off thing has crossed my mind too

The problem is it took us so long to get to this stage and get this property which is a good deal so I couldn't even think about doing all this again now so I really hope the settlement goes smoothly.

thanks members, Merry Christmas!

 

[Propertunity]

The problem is it took us so long to get to this stage and get this property which is a good deal so I couldn't even think about doing all this again now ....

You are becoming an anxious buyer because of all the time & emotion you have expended getting to this point - that is understandable. BUT when that happens, your judgement gets clouded (so you are to be congratulated that you came on here to get some other opinins from dis-interested parties).

Investing is just a numbers game. If the numbers and the deal stack up, then do it, otherwise walk away. Does not matter if you spent every waking moment on it for the last 2 years - still walk!

The buying the house deal is done - fine. The renting to the vendor deal is not yet done. Emotionally detach from this part. Get a bond, for goodness sake get LL insurance, get a lease, get credit checks - the same as for any tenant deal. If it does not stack up - then get vacant possessions & different tenants - God knows there's plenty out there

Merry Christmas to you too.