BYO Tenant

Hello there. I'm currently looking at purchasing an investment property. The property in question has tenants in place with a lease that expires in January. The problem I have is I have people that I wish to rent the property to(my Mum and Dad). The question I'm asking is whether it is ok to not renew the lease of the current tenants in January so that my Mum and Dad can then lease the property off me?
Thanks in advance.
Phil

 

My understanding is Yes; all you need to do is issue a Notice To Vacate to the current tenants.

If I am wrong, I am sure I will be corrected.

 

Or you could request vacant possession as part of your offer/contract.

That way the existing owner/landlord/agent will have to be the bad guy and give the current tenant notice in time for settlement.

 

You have 2 options essentially
- Put vacant possession in your purchase contract
- inherit the existing tenants, keep them til Jan and move parents in then.

Depends on what your timeframes are and where you're currently up to in the process.

 

The tenants would be half expecting to be given notice once the place sells.

 

Thank you all very much for the quick response. The lease ending in January is actually pretty much perfect timing for our circumstances.

 

You can purchase "vacant possession"? I had no idea about this.
So what happens to the tenant and the contract they signed?

What's the point of a contract if people can just be given their marching orders?

 

I don't believe they can be given their marching orders. We would simply choose not to renew the lease at the end of it's term.

 

As a potential buyer, you can seek to purchase the property with vacant possession, and then its up to the vendor to sort something out to get rid of the tenants in time for settlement.

Could be something legit (paying out the tenants to leave early), or something not so legit (bikies), but as the purchaser, its not your problem.

 

Are you allowed to rent to your parents if you use a mortgage to buy the house?
I was told I can not rent to immediate family while I have a loan against the property. But this is on a UK property.
Just wonderd if it's the same here.?

 

Can rent to whoever you want

 

Unless part of your SMSF there are restrictions.

 

Wouldn't waste SMSF on residential props though surely?

 

There are many thousands of Australians buying resi properties in their SMSF.

 

Topic for a separate thread perhaps, but SMSF's advantages/disadvantages lend themselves more toward commercial property or other asset classes.

 

@D.T. Found some hard numbers for you

SMSF property investment has traps for the unwary

Extract;
The RBA said only 23 per cent of SMSFs’ directly held property assets were residential

SMSFs surge towards 570,000 controlling $600B in assets - SuperGuide
Extract:
The exact number of SMSFs (as at December 2015) is 566,735

So using this information there are 130,349 SMSF with residential properties in SMSF

 

I completely agree with this and I/we have a SMSF but haven't and won't be buying residential properties in it.

However the OP didn't say if it was in their personal name or within a SMSF so there could be restrictions

 

I think you've done a disservice to the numbers there.

You're saying there's 566K SMSFs, then saying 23% of the ones with directly held property assets were residential. That's 23% of those that have directly held properties, not 23% of SMSF's.

 

Sorry I don't understand, can you explain further?

566k x 0.23 = 130k

 

Its 23% of the SMSFs that have property in them have residential ones, not 23% of SMSF's.