Considerations buying a leased property

Discussion in 'The Buying & Selling Process' started by surfando, 14th Jun, 2021.

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  1. surfando

    surfando Active Member

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    Perth,WA
    First home buyer here,

    keen to make an offer on a property that is currently rented till March 2022

    what would be the specific risks with such a buy? is there anything in particular that I should consider/be prepared for?

    also contract-wise, do you usually put in anything different than a in "standard" contract to mitigate specific risks?

    Your help would be much appreciated

    Cheers
     
    surfando, 14th Jun, 2021
    #1
  2. The Y-man

    The Y-man Moderator Staff Member

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    Not sure about WA, but in Vic, I would make sure there was a formal lease (via managing agent), that all rent was up to date, etc.

    Get the entry condition report (to know what was there, what is your responsibility) - we bought a unit once that was tenanted, and soon as it settled we were told the "dryer broke down" - apparently it was there when leased so we needed to provide a new one....

    You should be able to negotiate down on the basis it is occupied (fake it - put on a sad face and say "Oh, I would have loved to have moved in but I guess I'll need to wait...how about 15% off for my sadness?")

    Good things: you can get a sense of whether the tenants are looking after the place. If the tenants are present during inspection, ask them if there is anything needing to be fixed etc - they are usually brutally honest because it's their chance to get things fixed/improved if a new LL comes in.

    The Y-man
     
    The Y-man, 14th Jun, 2021
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  3. The Y-man

    The Y-man Moderator Staff Member

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    Not sure what it does to any FHB benefits.

    The Y-man
     
    The Y-man, 14th Jun, 2021
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  4. surfando

    surfando Active Member

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    Thanks for the replies The Y-man
     
    surfando, 15th Jun, 2021
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  5. Stoffo

    Stoffo Well-Known Member

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    March 2022 is a long way off.
    As you likely have to live in it for the first 12 months to qualify for FHB grants I'd make my offer subject to vacant possession at settlement ;)
    It is then up to the vendor to get the tenant to move (unless the tenant leaves, as they may be entitled to with as little as 2 weeks notice)
     
    Stoffo, 15th Jun, 2021
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  6. Cynthia Chow

    Cynthia Chow Member

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    Yes, make sure there is a formal lease agreement, and check the tenant has paid up to date. Check the pre-condition report and the last inspection report to make sure there is no major repair items and whether the tenant is keeping the house clean. You can also settle early to take over the lease and you will have full control of the property.
     
    Cynthia Chow, 16th Jun, 2021
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  7. surfando

    surfando Active Member

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    Thank you Cynthia Chow. I was thinking at this, but with a fixed term lease in place it does seem that there is not that much control actually (?) I mean, I pay hard earned cash now for a piece of paper that says I can access the property in March 2022 o_O

    Worst case scenario, to terminate the lease if tenant stops payingrent is at least 3 weeks. Also, what if tenant does not vacate by the agreed date? 1month wait, then court, then... :confused:

    on the positive side, if everything's smooth, rent payments more or less balance the one I need to live in, then just wait a few months, and move in :eek:
     
    surfando, 17th Jun, 2021
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  8. Hawks

    Hawks Member

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    We are in the same boat but the agent is refusing to provide entry condition report or the ledger, citing privacy reasons (until the contract is unconditional and too late). How does everyone else get around this to get access to these docs?
     
    Hawks, 4th Jul, 2021
    #8