With rentals so difficult to find at present, and so expensive, many renters are seriously considering buying their own home.
Instead of paying off someone else’s mortgage, they want to begin paying off a home of their own!
One idea that can be appealing is to buy the property you’re currenting renting.
If you are reading this, you may have decided it could be the right step for you.
So if you love where you live, learn how to buy your rental property.
Pros and Cons of Buying The Property You Rent
Here’s how we see the pros and cons of buying where you are renting.
Positives of buying your rental include:
- knowing the property’s best and worst features – every leak, squeak and noisy neighbour!
- avoiding the disruption and expense of moving
- no break-lease fees
- maintaining connections with your local schools, healthcare etc.
- more time to research your offer
- being the only party negotiating with the seller (hopefully!)
Downsides of offering to buy from your landlord can include:
- It may be difficult to negotiate once they know you want the property
- they may say “no”
- if you don’t look at other properties, you may miss a better buy!
Strategies For Buying Your Rental Property
If you’re interested in buying your rental property, knowledge is power!
Useful steps before you approach the landlord or agent include:
- Knowing your financial position – deposit, security of income etc.
- Investigating government assistance such as the First Home Owner Grant
- Knowing what you can afford to pay per month, and getting provisional approval from a lender
- Calculating the property’s market value (and what you are willing to pay for it) using either:
- a formal valuation (most accurate)
- the sale price of comparable properties sold recently and/or
- industry databases like CoreLogic RP Data, SQM, reiwa.com
- Considering ‘extras’ – stamp duty, legal fees, contingencies
- Searching the Title (and other reports) with Landgate – this can provide:
- owner names
- past sales history for the property / street
- rating valuations
- interests over the property that might affect your use of it – mortgages, caveats, easements, encumbrances, limitations on use, heritage listing etc.
- Researching consumer advice on buying property
- Familiarising yourself with contract documents:
- Contract for Sale of Land or Strata Title by Offer and Acceptance (non-strata properties) or
- Contract for Sale of Land or Strata Title by Offer and Acceptance (strata properties) and
- the Joint Form of General Conditions for the Sale of Land.
Lastly, consider any contract terms you’ll require (such as finance, pest or building inspection clauses) and how to word them effectively.
You can also get expert advice – check out our blog post on the pros and cons of buying vs renting.
Can my property manager or a buyer’s agent help?
Your property manager (and the agent they work for) also have a wealth of knowledge and a relationship with the owner.
Be aware however, the agency must prioritise the owner’s interests. They may agree to approach them about selling, but could feel obliged to point out other possible sales methods.
Buyer’s agents also have great expertise, can handle everything, and act only for you. They can be expensive though, and if the owner won’t sell, they still need payment!
Each option has pros and cons, so some tenants decide to put in the hard yards. They do their own homework, and approach their landlord directly.
So What Should I Do?
If you’ve done your homework, you can choose any of these approaches.
To go direct, you’ll need the landlord’s up-to-date contact details.
Consider putting your offer in writing, pointing out how convenient it could be to sell to you, and the savings on marketing costs, commissions etc.
If going through an agency, talk to the property manager, agent, or buyer’s agent for their advice. They can save you time!
For helpful support and confidential advice, call We Love Rentals on 6254 6300 or contact us online. Our experienced team members can answer your questions, and help you close the deal!