澳洲Australia property buying a property with a fixed lease (but


在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m


what are your opinions on buying (investment) property that has a fixed lease in place - like an existing tenant with 8 months fixed?

we did this for our first property (which went from IP to PPOR after the lease ended) and I think it worked out pretty well but I see myself as a pretty much inexperienced investor (apart from the experience I accumulate vicariously through this forum!) and I guess I'd like to know what people think the pros/cons are about purchasing properties in this position.

I see the pros are:
- less FHOG interest as most want a property they can move into straight away
- less agressive PI interest as they can't up the rent, value add straight away, flip it etc...
- at the moment, some PI's may be backing off until the FHOG winds down
- chance of a successful lowball as the sellers may be desperate
- likely sub-optimal display of property as the existing tenant's stuff is probably in there also reducing amount of interest

Cons
- possibly lousy rental income that you cannot change for a while
- possibly a lousy tenant (if the prop managers are also selling the property it may be hard to get a straight answer, although the condition of the property may offer some hint)
- if the place is furnished, it may be hard to determine condition of some parts of the house (i.e. under the bed, etc). I guess you could negotiate this into the contract of sale if you're lucky

Any other thoughts about this? It seems like a reasonable strategy to me (being a new, non-aggressive wanna-be small-time prop. investor!), but would like to know what others think the strengths/weaknesses are, and also if my pros/cons seem reasonable.  

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Your lists sound pretty good to me, but I have never bought a house with a tenant in situ so I have never had to think too hard about it.

Your point about not being able to have a really good look at everything would be my biggest worry. Behind the paintings could be a hold, or behind the sofa could be bad plaster, but I suppose you may need to move a few things away from the walls to check. However, this is really no different to buying a place with an "owner" living there and the owner would have more reason to "hide" things than a tenant.

Regarding the rent, and payment history, is this something you could ask the PM for up-to-date records, or at least a written confirmation that they pay on time etc. They should also perhaps give you a written appraisal of what it would rent for now, if it was vacant.  

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buckerooni said: ↑
I see the pros are:
- less FHOG interest as most want a property they can move into straight awayClick to expand...
Not necessarily, to qualify for the FHOG/B you only need to move in within 12 months of purchase. Some will want to move in straight away but there are plenty of others who don't want to live there at all and do so only for the 6 months that they have to in order to qualify for the grant.

buckerooni said: ↑
- less agressive PI interest as they can't ..... flip it etc...Click to expand...
Not a lot of flipping happening atm.  

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I think you've weighed up the argument quite well.
I agree with what Propertunity says but feel that most FHB will want to move in ASAP as paying rent where they live and having an IP to deal with in the interim is outside of their comfort zone. So, that gives you a bit of an advantage in this instance.
Looks to me like you have all the questions lined up, so you just need to fill in the blanks and make a go/no go decision.  

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wylie said: ↑
Your point about not being able to have a really good look at everything would be my biggest worry. Behind the paintings could be a hold, or behind the sofa could be bad plaster, but I suppose you may need to move a few things away from the walls to check. However, this is really no different to buying a place with an "owner" living there and the owner would have more reason to "hide" things than a tenant.
.Click to expand...
Thanks for the feedback, having only negotiated one property I'm a little thin on what other people do, but would putting a condition on this be a way to protect yourself i.e. 'subject to condition of fixtures & coverings - any unseen damage to interior elements to be repaired before settlement at the expense of the vendor' - that you'd inspect just prior to settlement? As long as it's not bought under auction conditions, I suspect you should be able to do this?  

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Cons
- possibly lousy rental income that you cannot change for a while
- possibly a lousy tenant (if the prop managers are also selling the property it may be hard to get a straight answer, although the condition of the property may offer some hint)
- if the place is furnished, it may be hard to determine condition of some parts of the house (i.e. under the bed, etc). I guess you could negotiate this into the contract of sale if you're luckyClick to expand...
- check the rental income being received against market rents. Easily done on realestate.com.au
- hard to tell if a lousy tenant, but ask to see the rental file which should give a few clues. Incidentally, this will apply to all new tenants, sometimes bad apples slip through. Ask also to see the ledger showing the date and amount of rental payments, this will let you know if the tenant pays on time. Any reluctance to disclose these should be treated with suspicion (assuming the selling agency handles the rental).
- these points apply to any furnished property. You can only do so much poking and prodding.

Other pros
If the place is tenanted, then talk to the tenant. He/she will soon tell you any problems with the place.
You receive income from day 1 without the expense of installing a tenant.

We bought a unit with an existing tenant. Sold it 16 years later with the same tenant in it, but tenant had to leave as it was bought as a PPOR. No vacancies, no PM as tenant was a single pensioner lady who looked after the place as her own and deposited the rent every fortnight into our bank account. Even organised repairs and insisted on the pensioner discount!

It worked out very well overall. We had the place tenanted through the lengthy vacancies of the early 1990s, only having the rent fall a bit below market with the steep rises of 2004-06. This was more than made up by getting top price as the unit was in immaculate condition.

Treat every situation on its merits and an open mind.
Marg  

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bump.....

atm in nsw I have seen a 1 bedroom apartment which I am considering of placing an offer.

The place has tenants on a fixed contract until February 2nd 2013. This will be my PPOR , so I will be able to use the FHOG ($7000.00)

Being a kiwi I am surprised at the one sided laws this country has in protecting tenants!!!! seems like being a landlord is tough work!

Is it correct I won't be able to boot out the tenant upon purchase? and will have to wait until 2nd February 2013?

Details as follows :

$489K sale price nego.
$495 per week rent (PM fees = 5%)
~$1750 pq in strata water and council
interest rate i have been able to get is 5.95% @ 80% LVR...
expected settlement date = September 21st

Currently I am renting a place for $320 per week.

I guess if i go ahead with purchase, worst case scenario - tenant does move until February.

Does that mean I will be a 'landlord' so to speak until Feb 2013, and that the above will be considered as income hence taxable? however I can claim interest and other expenses.

Will this affect my CGT when I decide to sell it say in 4 years time?

For purposes - this will be my PPOR  

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How does this situation affect cgt? Would it still be exempt if ppor even though not from day dot.  

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