Are you renting a place you love, but also looking to purchase your first home? Why not buy your rental property – even if it’s not on the market?
While it may seem counterintuitive to contemplate buying a property that’s not technically for sale, an increasing number of tenants across Australia are doing exactly that and approaching their landlords through agents.
LJ Hooker’s head of property investment management Amy Sanderson says the phenomenon of renting to own is real. “It doesn’t happen every day, but it does happen,” she says.
Sanderson says such bold “tenant-turned-buyers” generally fall into two categories: tenants who have been renting a property for a very long time and are finally ready to buy, yet don’t want the risk of having to move; and potential buyers who move into a rental to ‘try’ a new area and end up falling in love with the property they are in.
“For these tenants, purchasing makes sense,” she says.
If you love living where you rent and are ready to buy, why not make an offer to your landlord? Picture: Getty
But how can it be done? Sanderson says it comes down to research and realism.
“Research, research, research!” she says. “Go onto realestate.com.au and search for properties with a similar description to yours and go and view these properties to get a feel for what the real comparisons are.”
Then, keep an eye on what properties sell for and record it.
Research the market to get a true sense of what the property is worth. Picture: Getty
“Compare these properties to yours and determine what you believe market value is. If you pay over the odds for a property because you want to secure it, you want that to be your conscious decision, not because you didn’t know,” Sanderson says.
Armed with market intel and an offer, reach out to the owner, though the property manager.
“I would suggest putting your offer in writing, so your message is clear and not misconstrued. Discuss that you like the property, what else has recently sold, how this property compares and your price you have come up with,” she says.
It’s also a good idea to “educate yourself on the cost and process” of selling a property, so there’s no surprises, Sanderson says.
“Where an owner sells direct to a tenant, they may save on some of these costs – and stresses – involved, meaning you might be able to negotiate a price that accommodates this saving for both of you.”
Whether a landlord will sell depends on personal circumstance, Sanderson explains.
“People buy an investment property to make money, so for someone to consider selling, they need to feel they have made a return on their investment. The tricky part is, everyone’s view on what an adequate return looks like is different.”
