Tenant future purchase?

[davemc]

This is a no-go zone.
You simply cannot lay-bye an asset that can earn income and has running expenses for months on end and still expect to be making a profit.
And, you are basically signing an agreement to sell, without all the terms and conditions that are standard with that type of agreement.

 

[Waaib]

... First thing I thought was 'nice - a monthly income and guaranteed sell in 5 years' ...

That DOES actually have a certain amount of value though to it so no harm in exploring the options.

Soundds more hassle than it's worth

That's what I think too. I've had a tenant ask me for 'right of first refusal' once. When the time came to sell I gave him his right to refuse and he strung me along for 5 weeks causing me to lose 2 other potential buyers.

Why can't you sell before 2015?

 

[Dolby]

The house was an inheritence - all due to a mistaken claus in the Will.

And this is why one shouldn't draw up your own Will id you're not sure what you're doing - as it can impact on quite a bit later in life

 

[Waaib]

The house was an inheritence - all due to a mistaken claus in the Will.

And this is why one shouldn't draw up your own Will id you're not sure what you're doing - as it can impact on quite a bit later in life

Sure but the impact isn't on the dead person.

(All due respect to the dead person). I obviously don't know the details but what I do understand is that dead people can't make up rules for living people. For example you can't put something in a will that says "if my son gets a MBA degree then he can have R1million". You can only dictate what you'd like to do with your assets and can't put terms and conditions to them. There is some fancy legal word for it but basically dead people can't tell living people what to do.

Have you had the will or that part if it checked for legality? Once you own the property and it's in your name it yours. At the same time 'forcing' you to rent it out and earn some income from it isn't completely silly.

 

[Vegeta]

I didnt read everything just the first post and first off the bat you get the short end. They pay NO rent they pay off THEIR house for 5 years your money comes in drip drip.
I wouldnt even look further than that. This is something a Dad would do for his son or daughter who wants to enter the property market. Are these your children?

 

[Dolby]

No no ... in a nutshell :

Estate was left to my brother and myself until age 28 (I'm 29 - so received my 50%, but he's 23 ... so his is still in the trust). But there was a clause excluded (by mistake) saying that the trust could enter into transactions on behalf of the beneficiary.

So basically the trust is simplyonly keeping his 50% until he's of age - without any authority to transact and enter into contracts on his behalf (even if beneficial to him). This clause IS is in 99% of deceased estates, but for some reason on this particular Will it's excluded. What this means is that the house is 50% Dolby and 50% Dolby Brother Trust. As they cannot enter into agreements and can do nothing, we can't sell the house until he's 28 and the house goes from Dolby Brother Trust to Dolby Brother.

 

[Dolby]

I didnt read everything just the first post and first off the bat you get the short end. They pay NO rent they pay off THEIR house for 5 years your money comes in drip drip.
I wouldnt even look further than that. This is something a Dad would do for his son or daughter who wants to enter the property market. Are these your children?

Nope. Just a normal tenant.

As I said, in casual conversation was attracted me was

a) Having a guaranteed income and good tenants for 5 years
b) Having a guaranteed buyer at the end of the day

However took me 30 minutes of clear thinking to work out how much I was losing

 

[Dolby]

http://www.thepropertymag.co.za/pag...ust/news/Instalment-sale-makes-a-comeback.asp

This is the link she sent ....

The sale of property on installment – or by Terms Deed of Sale – is making a comeback as buyers experience increasing difficulty in qualifying for home loans.

And RealNet property group CEO Tjaart van der Walt says this method of purchase, widely used back in the '70s, does indeed offer solutions in tough times, particularly for first-time homebuyers.

"The basis of an installment sale transaction is an agreement between buyer and seller in terms of which the buyer agrees to acquire the property in more than two instalments, over a period of more than a year and less than five years. It is possible that no deposit will be required, and of course it means that the buyer does not immediately need a home loan.

"Only at the end of the instalment period will the buyer need to close the transaction via a new home loan or cash, and only then will transfer duty be payable."

However, there are some potential problems, Van der Walt cautions. First, if the buyer defaults on his monthly payments, or cannot close at the end of the instalment period, all payments made will be lost and the property revert to the seller.

Second, it is vital that the instalment sale agreement is properly recorded in the Deeds Office by a conveyancer as this provides protection for the buyer should the seller become insolvent before the final instalment has been paid.

"Should that happen, the buyer will be able to take transfer of the property by paying the outstanding balance of the purchase price, or the total sequestration costs, or the amount owing on any existing mortgage bond or improvements to the property, whichever is the greater.

"And if he cannot raise this money in 30 days, the property will fall into the insolvent estate and the buyer will at least become a preferred claimant ranking immediately after the bank or lender of any bonds on the property."

Having the sale recorded will also protect the buyer if the property should be attached by court order before transfer is passed. If it is not recorded, the buyer stands to lose the property and all instalments already paid, as well as the costs of upkeep and any improvements that may have been made.

"Notwithstanding these considerations, though, instalment sales are seriously worth considering in the current market, and offer advantages for sellers as well as cash-strapped buyers.

"These include the possibility of a fast sale and quick registration of the transaction as there is no transfer process, the relief of having money coming in to meet the repayments on an existing home loan, and the benefit of having buyers living in the home and looking after it as their own rather than having to deal with tenants."