My wife & I have been renting in a large condo last 6 years, from longtime (25+ years) owner. Very laid back landlord - rent increases have been basically 3%/year. Flip side is the unit has not been maintained up to the condition of comparable apartments in building. Landlord asked if I'd be interested in buying apartment the next time lease comes up. Apartment is a large 1BR/1Bath, could chop... [more]
My wife & I have been renting in a large condo last 6 years, from longtime (25+ years) owner.
Very laid back landlord - rent increases have been basically 3%/year. Flip side is the unit has not been maintained up to the condition of comparable apartments in building.
Landlord asked if I'd be interested in buying apartment the next time lease comes up. Apartment is a large 1BR/1Bath, could chop in another bedroom though might not be ideal. We thought we'd save up to buy 2BR for our first apartment, but if the price is right this might be a nice starter apartment situation to grow into.
Apartment has basic entry level condo conversion fixtures/cabinets/flooring from the 80s that were never replaced. Looks like something from a rent stabilized apartment. Water fixtures are leaky with knobs that turn the wrong way or don't match each other. The only recent appliance is the fridge. Even the heat pump is 30 years old and breaks yearly. Rest of apartment generally show it's age - window frames shot, doorknobs that don't turn correctly, wood floor with a few spots of damage.
Living in it as a renter has been great, great building&location at a very reasonable price.
Comparable apartments in the building that have sold/rented are generally much more modern, upscale fixtures. Buyers in my building would likely consider the bath&kitchen a gut renovation situation.
I'm trying to determine a formula to come up with a reasonable price, were he to offer one, or for me to counter offer.
Landlord is the one who broached the topic of selling, and certainly has some convenience/cost benefits of just selling to his current tenant.
Discount for condition - 100k ?
Discount for easy transaction - 6% ?
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Response by Flutistic
over 10 years ago
Posts: 516
Member since: Apr 2007
A couple of things.....I sold a townhouse to a tenant of mine once, and I gave the tenant a better price than I could have obtained on the open market. I did it because I liked him, he's a cop who specializes in child protection services, besides having been a wonderful tenant.
So if I were you, I would let the landlord name a price first. The negotiating power is always in the hands of the one who responds to a first offer anyway. You might be amazed at what you hear.
Other thing, as a renter you don't care about the building. As a condo owner you had better check it out. Yeah hubby and I bought a condo unit, but I consider it a risky investment, too risky for my comfort frankly. It sounds like a nice building tho since people are renovating apartments, the owners obviously believe in the place. But there is a whole 'nother level of responsibility in owning rather than renting--you immediately need a new heat pump. If you can't afford stuff like that, big cash outlays, you'd be better off renting here or somewhere else methinks.
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Response by snezanc
over 10 years ago
Posts: 121
Member since: Oct 2007
take Flutistic's advice. These transactions get emotional very fast.
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Response by Aaron2
over 10 years ago
Posts: 1705
Member since: Mar 2012
There would be no broker involved, so the owner is saving between 3 and 6%. Since it's been essentially untouched in 25 years, think of it as in 'estate condition', and needing a full renovation, so discount from comparable modern units in the building. The renovation will be a significant up-front expense, and you will need to live elsewhere during the reno, as well as move everything out during the work, which will be an additional expense (though one you will have with any purchase needing reno). The landlord's first ask better be appropriately low.
A couple of things.....I sold a townhouse to a tenant of mine once, and I gave the tenant a better price than I could have obtained on the open market. I did it because I liked him, he's a cop who specializes in child protection services, besides having been a wonderful tenant.
So if I were you, I would let the landlord name a price first. The negotiating power is always in the hands of the one who responds to a first offer anyway. You might be amazed at what you hear.
Other thing, as a renter you don't care about the building. As a condo owner you had better check it out. Yeah hubby and I bought a condo unit, but I consider it a risky investment, too risky for my comfort frankly. It sounds like a nice building tho since people are renovating apartments, the owners obviously believe in the place. But there is a whole 'nother level of responsibility in owning rather than renting--you immediately need a new heat pump. If you can't afford stuff like that, big cash outlays, you'd be better off renting here or somewhere else methinks.
take Flutistic's advice. These transactions get emotional very fast.
There would be no broker involved, so the owner is saving between 3 and 6%. Since it's been essentially untouched in 25 years, think of it as in 'estate condition', and needing a full renovation, so discount from comparable modern units in the building. The renovation will be a significant up-front expense, and you will need to live elsewhere during the reno, as well as move everything out during the work, which will be an additional expense (though one you will have with any purchase needing reno). The landlord's first ask better be appropriately low.