Selling my OO house to lease back to me. Good idea?

I'm considering selling my house (4 bed owner occupied family home in North West Sydney) and looking to upsize in the next 12 months out of Sydney rat race family reasons. In the meantime we will rent in the same area as the kids are in the middle of the school year and also its much easier to jump straight in when the right property comes along.

Instead of finding a rental I have just heard about leasing back your property. If you were an investor would this be an attractive proposal if the REA offered it to you? One of the issues in my area however is that its probably a 70/30 spit with more OO than investors, plus investors normally go for the cheaper 3 bed houses.

Pros for us is that we don't have to move once we sell however would this cause potential investors to want to offer less money than normal because of a clause that they have to lease it back to us?

 

Do you think it will drop in value over the next 12 months?

 

Don't think so not that much if it does, my area is a little cheaper (under $1 million) and stats show its holding up okay and not much stock around. My main concern and reason for posting is around if this would be an attractive proposition for an investor?

However of course if an owner occupier offered a lot more then I would happily accept and have to wear the inconvenience of finding another house to rent short term.

 

What about the option of selling with delayed settlement until 1 jan 2017.

As an investor I would take that deal (provided my finances don't change)

 

It would be attractive for an investor as they can see how you maintain the property and don't have to worry about finding a tenant.
However, as you said there are more owner occupiers so when you are selling, this would eliminate all of the potential buyers that are looking to buy to live in.

Moving a few streets away isn't as inconvenient as moving to another state which you are planning to do later on.

So in your area you should sell with vacant possession and then rent somewhere nearby for the best results.

 

Down side for me would be that I can't put the large capital from the sale into high interest account, also paying council, strata (we have strata) and maintenance costs. Plus if I see the dream house before 1st Jan I can't move, if I don't find it then I have to move by 1st Jan.

 

You will significantly limit your market if you target investors. Most buying a PPOR want to move in straight away, aside from the fact that renting first means complex record keeping for proportional CGT on eventual sale.

You are at a further disadvantage as you first said you want the security of a lease until next January, but then above you say you want the option to move sooner if you choose.

You will be lucky to find a buyer prepared to accept such flexibility unless the sale price is at a discount.

I know if someone who bought under similar circumstances, the vendor was building and needed the finance to complete, but wanted to rent back for up to six months, with the option to move earlier on two weeks notice. Sale price was extremely attractive which made the deal worthwhile for him.
Marg

 

I'm with nick, just look for a place to rent nearby instead

 

As an investor, this could be potentially attractive (assuming you are an attractive tenant), as there would be no time lost without a tenant and assuming no upfront letting fees (eg to find a tenant). For you, I can definitely see the draw as no moving costs, etc.

 

Agree with this. As an investor, I would buy it.

 

As an investor I wouldn't touch it. I would offer delayed settlement though.

Being tenanted means I can't inspect anything properly, and I would be up for all these "repairs" that the owner was previously aware of. No thanks.

 

You can't be serious. That's a worst possible reason.

 

I am very serious.
I would take vacant possession where possible. Gives me a chance fix things up beforehand and be able to screen for better tenants.

An owner occupier of an existing house does not make them a better tenant.

 

Don't know what investor would buy a high priced, low yield property in the first place though.

 

Could be high priced, but if it is below market value, its still good value. Yield is not the only factor. In fact, all my properties have been low yield, but CG has outdone it multiple folds.

I wouldn't go specifically for a high price low yield property, but each property is unique. I just don't get the point of vacant possession being high on the list. You can still do your 'Inspection' as thoroughly as you want with the tenanted property. Also, owner occupiers generally have a property in better condition than tenants.

 

Would be a lot in Sydney the last few years.
Some might have down alright out of it as well.

 

I wanted to sell our OOP a few years ago and lease back for 5 years. Mrs wouldn't have a bar of it.

If I was an investor this would tick a big box for me having a tenant ready to go. You could advertise for a long lease to draw an investor?

 

Are you pleased you didn't now?

 

You'd have to ask anyone who buys in the inner west - plenty of houses sell in the high $1m mark but returns are more often <$1000/wk.

Looky here