Approaching Landlord to Buy
I would appreciate any advice about approaching our landlord about purchasing the brownstone we live in. Currently, we rent a duplex and another tenant has the other duplex. We have looked at many brownstones in the neighborhood and feel we know the comps based on location and condition of the building. We think the house…
I would appreciate any advice about approaching our landlord about purchasing the brownstone we live in. Currently, we rent a duplex and another tenant has the other duplex. We have looked at many brownstones in the neighborhood and feel we know the comps based on location and condition of the building. We think the house is worth about 20% of what other houses have sold for on the block because it needs major work very soon (buckling floors).
The landlord lives outside of the city and has owned the building for 30+ years. I don’t think the landlord has actually been in the building for several years. My question is – do we approach directly and have a conversation or should we be more formal about it, and if so, what would that mean? My significant other is convinced there is no way the owner would sell for less than other homes on the block if renters like us continue to rent this place. The lowest level needs major repairs because the floor has old water damage, dropped ceilings and press board “walls” that are on their last days.
Any advice on approach?
I’d start by letting the landlord know that I’m interested in purchasing the house, and also let them know they can make more per month by owner financing. this way they continue to receive the monthly income but no longer have to worry about property maintenance, overhead, etc.
True but you are still paying commercial prices when you purchase it.
It’s not commercial if it’s your primary residence.
This is one of the problems I have with real estate in Brooklyn and I know my good friend DIBS will comment on this but real estate in Brooklyn is really commercial and not residential. So if the residential crisis has not started yet then Brooklyn real estate prices are still heavily overpriced and only a crash in the commercial real estate market, which will arrive shortly, will adjust those exagerated prices.
If it’s in as bad shape as you contend, and the landlord is still getting $6500 a month rent out of the place, I can’t imagine what could motivate him to sell. Are you paying above market rent? Can’t hurt to ask if he’s interested, but I wouldn’t get your hopes up of getting a steal.
You might approach him with a reverse mortgage offer – i.e. he sells you the house, but HE is financing the mortgage, essentially. If you can offer him a per month payment equitable to what he’s receiving in rent, maybe even higher, then the house becomes yours after 20 – 30 years or whenever he dies, whichever comes first. This is the kind of thing they do in England all the time.
It guarantees him a steady source of income and relieves him of the hassles of home ownership and being a landlord – those are your duties now. You get equity built up, the right to do renovations as you see fit, and title.
These private arrangement still take a couple of good real estate lawyers and are not common, but not unheard of, either. The most common version of this is children buying a place from their parents.
For some older people who own a building outright they value the regular rental income a lot; it makes them feel more secure. In their eyes, a big lump of money in the bank can be spent then they have nothing, so it’s not as appealing to them as we assume it would be.
IB I am not paying I want at least six months free rent and at least 50 percent reduction in rent after that.
Too late. I just bought the building. From now on please mail your rent to me.