...and then I thought...there's probably an investment property forum...

Sorry, It's nothing personal. I don't know you. Sometimes prospective tenants look good on paper and then turn out differently. This can be for a variety of reasons. Your length of time renting and lack of rent increases doesn't guarantee me a good tenant.

 

Nah I wouldn't do this...it's a one sided transaction heavily benefitting the tenant ...and we're the ones financing the deal? No thanks. There's also nothing stopping you from breaking the lease after I've built you a 'customised' property potentially with purple walls and shag carpet.

I tell you what I'd be prepared to do - going halves with a tenant for cosmetic improvements to the property, like a new kitchen, bathroom, deck etc in exchange for a 10 year tenancy agreement (marked to market rent each year of course).

That way, they get a reno-ed property suited to their tastes (post my blessing and agreement) and security of LT tenure - pseudo ownership without the hassles of dealing with banks, doing repairs, paying council rates etc etc.

I don't know why more tenants, particularly those who want to live in areas they can never afford (to buy in) don't propose this. I'd be more than open to it being a buy and hold investor.

 

I don't think this topic will go very far.
Are we there yet?

 

That is the situation where I am now, yes, because I am a quality tenant (which must surely be self-evident from the lack of rent increase - first and only increase was after 9 years, and even then with an apology).

That does not imply that I'm requesting that to be the case for this idea. I am merely trying to substantiate that I am not a bad tenant.

It is the case where I am because it is a 100 yo property and they need almost constant attention, which is what I've done. The owner's father and I have maintained and developed the property over the years (shed reconstruction, new shed build, extensive fencing, retaining walls). Some things I paid for and did by myself, other things were funded by him and had significant labour input from me.

A fair question would be "Why do I want to move from here if the rent is so low?" and there are two parts to that answer. The first, and most compelling, is that unless plans have changed, as I understand it this is the owner's retirement house, and I imagine that will be coming up in the next ~5 years or sooner. The second reason is the house itself: the floorplan is a little frustrating, there is no option for Solar power (asbestos roof that no one wants to know about), offstreet (uncovered) parking only for one vehicle, and extensive garden maintenance on land that is largely useless (long skinny block 9 x70m).

It seems that tenants are sometimes viewed as a necessary evil, when in reality they are the lifeblood of investment properties. I have always viewed the relationship between owners and tenants as symbiotic – they need each other for the situation to work. Of course there are terrible tenants out there.

Perhaps we can just assume for the moment that the quality of the tenant is not a problem and substantiation of that can be made if and when? It seems like the wrong thing to be hung up on.

 

a forum of mostly investors arent showing any positive interest.

what does that tell you?

 

Ok, so what do the investors want?
Positive cashflow? Tax benefits? Capital growth? All three?
Long term investment or short term?
Which parts of that outweigh others?
Is there something else required? (apart from a good tenant).

 

You have to prove why doing it your way has BETTER returns than the investor doing it without you.

from a risk point of view, would rather risk a bad tenant that can be removed, than risk a long term tenant that might turn bad and cannot be removed.

you probably dont see what landlords are reading into your posts. To me you seem like a high maintenance tenant if you list what is bad about the property. Landlords want a tenant that is ok with the property, pay the market rent, and move on when it doesnt suit them anymore.

You lucked out with a landlord that suits your style. Self managed with no agent involved?

 

I completely agree and I'm also very much in favour of increased tenant rights and responsibilities, so it can be more of a home for them, rather than just being the place where they live for a while.

I think that's what it boils down to. Good tenants are a fantasitc thing to have, but they're not that rare. It's commendable that you've done work on the house, but I dare say that most landlords wouldn't want this (I'm definitely an exception to that).
The other issue is (and I'm again not doubting that you're a good tenant) is that every single tenant will say they're a great tenant.
Unfortunately if you want someone to custom build a house for you, you'll have to come to the table with a lot more than just being a good tenant.

What's wrong with existing stock that they don't qualify for what you want? I still feel like there's something you haven't told us yet.

 

BM,

your idea is not entirely new as this is done on many occasions for large commercial property.
In those cases, the future tenant has to have significant assets and guarantees in place to ensure viability for the developer. The tenant doesn't do it themselves as their capital is best spent directly in their business. Look at any of the major Australian Companies, they have a named building but don't necessarily own it.

I doubt this would work for resi as you would need to demonstrate a high level of assets or guarantees for the developer and if you had those assets it would be more cost effective to do it yourself.

 

Small investors wont risk it.
Large investors wouldnt bother.

 

That's why I posted a list of questions – to get a feel for what investors want in their words, not my forecasts.

Depends on what you think makes a bad tenant. There are enough reasons why a tenant can be removed before the lease is up, regardless of the length.

Crikey, I'm just saying why it's time to move on from this property.

I think you must mean lucked in, not out. No, there has always been an agent, but they just haven't had much to do except forward the rent on. The father did quite a lot of renovating before I moved in, and just continued on as the maintenance person until a couple of years ago when age stopped him.

I'm not making a comment on rarity of good tenants. I'm simply saying that at the right time, I can substantiate that I am. Other than that I'm trying not to dwell on that (but do feel I should respond to certain statements).

Given that I am proposing a new property there should not be any (or much) ongoing work to be done.

There's not much on the rental market here. No there's nothing particularly being concealed (or not that I can think of). I'm 65 if it matters, but I imagine that was reasonably obvious.


Indicative answers to those questions I posted would be a help. Depending on those answers I would soon enough be able to see if this would fit in with those objectives or not.

 

The reality is as a tenant with little money, your only value to an investor is to pay rent. And there are plenty of decent tenants out there.

Now if you were a LAND OWNER with a site that can be developed showing a good feasibility, now I'll sit down at the table with you to discuss business.

 

CG cannot really be controlled, only assumed so it's out of the equation.

If I'm gonna build something at a total cost of 1mil, my estimate finished value needs to be min 1.4 mil.
Gross return needs to be min 6% and increased in line with inflation and value of the property.

Legislation is a new fact as residential tenancies rules are increasingly changed and not in favour of property owners. The latest of which is regulated rents.
I have no idea how to account for this long term and what type of premium is needed as it's an evolving matter.

 

I am trying to work it out… not there yet

 

The land owner could do a DA and on sell as long as the numbers stack up. This can be a lucrative option if they do not have funds to build. They dont need experience, they just need the right professionals involved

just saying

 

That's one option. They could make even more money by working with a developer to see the project through. There are a few options which would be viable. But there are no options which includes tenants.

Imho the OP has greatly overestimated the value of a tenant to an investor, especially a developer.

 

The OP should just go into public housing instead of private rental.
Government provide the best type of housing for very low / no income people.