Buying Grandparents House

Hi Everyone,

Long time reader, decided to reach out as the best approach to an opportunity.

Unfortunately my grandparents are to a point (93yo's) where they will shortly be looking to move out of their 3 bed, 1 bath, 2 car garage on 950m2 in Frankston. As someone looking to get into the market, it was presented to me an option to purchase their home. Im keen to do so as a bit of sweat equity via some home reno's could help realize some potential. House in very good shape just dated, (think lino floors and olive carpet + walls).

Any advice as to the most cost effective way to approach this. Obviously not looking to take advantage of the grandparents and pay fair price, but surely there's got to be a way to leverage this into a win win?

Lastly, i have the thought about changing what is the sun room into a new master with ensuite. Worth the effort? Or better to keep as is.

I would be a first home buyer looking to make PPOR for at least 12 months then potentially sell or turn into IP.

Any thoughts or advice would be greatly appreciated!

 

Is it a preCGT property?
Do they have to sell?

 

After a quick google of this (sorry, still a newbie) yes, it’s from well before 1985 so pre cgt.

And yes, they need to sell as they need the money to move into their retirement community.

 

Sad to see oldies lose their houses as they move into old ppls homes.

Hope it stays in the family

 

Are the grandparents trying to help you?
Or you are trying to help yourself to their property?

I have to apologies if I am too direct.

 

No apologies needed. Sadly they arent in a position where they are making their own decisions, hence why grandma cant stay alone in the house much longer (grandpa already in nursing home). The decisions are being made by the three daughters of which all are onboard as they would be selling anyway. The circumstance has arisen where they will need to sell the house. Im not looking for a handout at all. Definitely not trying to help myself, her well being is the main priority, but also trying workout if there is a way to structure this whole thing fairly so that everybody wins.

Have discussed establishing market value through an average of multiple appraisals, deducting any fee's and costs out of it, and then that is the price I would pay directly to them. I am trying to develop a plan around it all at this stage to present to everyone involved. Hope that makes sense?

 

Everything about getting old is sad! Its a tough time and never easy, but to put in perspective they have done very well to be self sufficient in their own home up to 93!

 

+1 on this. It will be more accurate and more legit than getting a few REA valuations.

 

Not only will you use the valuation for the price that you will eventually pay but also as justification for stamp duty and claiming any FHBG.

 

What Wylie and Westminster said is true.
Great advice given.

 

I have a client who did this recently. You have to be very careful about buying from an elderly relative as there will be potential allegations of taking advantage of them. this will be the case even if you pay market value and the children of the grandparents all agree. Some more distant family members won't like it.

So I would suggest 3 separate valuations and average them out. Also make sure there is a contract of sale and you should each use different solciitors.

 

Totally agreed. Don't let a property spoil the relationship in a family. I know there are exceptions but I see more commonalities when someone in the family being perceived to taking advantage.

 

Are your grandmother and grandfather not being given any say?

 

If as you say you are going to pay market price minus agents fees the what is the benefit of you to purchasing the property? Surely you want a discount otherwise you could pay market price for any other property and not limit yourself to just this one. If getting a discount the I can see the benefit but otherwise you should decide if there are better options at the price point.

 

Well for a start, it removes the agents slice, plus any marketing cost, plus cost of getting it sale ready.

 

Ofcourse they are. Its a case of when the inevitable happens. Why sell it to anyone, when you could sell within the family.

 

It’s just that it sounded like the decisions were being made by the daughters so I wondered if they were no longer able to make decisions themselves - and if there was an enduring power of attorney activated?

 

I feel like I should re-iterate.... grandparents well being is number 1, and it is in agreement with all family members. Not going to bore everyone with all the circumstances but this will happen in the next couple of months regardless if I'm involved or not. Id rather leave the personal/emotional/family side of things out of this discussion as it under control not exactly the issue at hand. Having said that, I really appreciate everyone's input regarding the property side of things and am open to discussion around how people may have approached this in the past or if there's a best approach theoretically.

 

an alternative for the grandparents could be to keep the property and rent it to you and the retirement home could be funded from a related party loan. It saves the stamp duty, gives greater asset protection and the property will be free from CGT still.