Buying the rental property that you currently live in gives new meaning to the saying ‘try before you buy’. In an ever-changing market, the timing may be right for the landlord to sell the property without incurring property marketing costs which typically run into several thousand dollars.
Negotiating a Win: Win Scenario
One negotiation tactic is to approach the real estate agent and provide a reasoned justification as to why it is a win-win for both parties. If you have researched the local property market and understand the median value of recent sale prices of equivalent properties, the agent will be obliged to present the offer to the landlord. A pre-emptive offer avoids having to compete with multiple prospective buyers on other properties.
Seeking Repairs Before Offer
If you are looking to make an offer, before you do so, be sure to ask the property manager to request property maintenance such as roof repairs, hot water systems, electrical fusebox repairs and broken lights. As the property tenant, you have a unique advantage of being able to have trades people visit the property to assess and provide prices on replacements and renovations. You can use these quotes to take into account the final offer you intend to submit to the real estate agent to pass onto the landlord. By living in the property, you are able to evaluate what needs to be replaced or updated.
Don’t Get Emotional
The landlord is also in a good bargaining position as they know that not only are you interested, you are also somewhat emotionally invested in the property because you’ve already made it your home. Take time to think about when you will make the offer and be objective. If your rental lease has 6 months left to run, the landlord will have sufficient time to consider your offer and also for the statutory settlement period to take place. This varies from state to state so be sure to check with your conveyancing solicitor. Don’t leave your offer to the last minute as this will disadvantage you as the landlord can instruct the agent not to extend the property lease as a tactic to force your hand to raise your initial bid price.
Future-Proofing the Property
Ask yourself things like is the property in a high growth area? What are the demographics of the suburb? If you need to rent it out in the future, what kind of tenants are you likely to attract? Is there good access to transport, services and amenities such as schools and health care that would suit your needs in the future, or the needs of your ideal prospective tenants? Just because you live there now and ‘already know’ the property, doesn’t mean you should overlook the normal considerations you would make when buying into an investment. Be diligent!
Obtain An Independent Property Appraisal
If you are confident about securing finance and you feel sure the property will be a good investment then next stop is to find out if the landlord even wants to sell it! Knowing a little about them will help – do they own other properties? Is it a family property they are holding onto for personal reasons? They may be surprised when you first raise the idea so having a well thought out approach will reassure them that you are serious.
Make the Offer
Once you’ve agreed on a price, you can make a formal offer and this should ideally be done in writing to the agent who can pass it to the landlord. This is the point where a real estate agent can step in to assist and finalise the sale as an objective facilitator. If you do all the prep work and then discover the landlord doesn’t want to sell at all, don’t despair. There are plenty of other properties out there and you can now quickly jump into prospective buyer mode to find a property even better than your current rental.