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?
He’d have a huge tax bill first of all. After that though he could make at least 6% a year over the long term and 4% + consistently in 30 year Treasuries.
It doesn’t hurt to ask. $6500 a month is pretty good income. I wouldn’t sell.
At $6500 a month that comes out to 70,000 dollars a year income give or take a thousand bucks. Even if you offer him a million dollars and that would be a very generous offer. My friend DIBS knows how much I think brownstones are really worth, a million dollars at 2% in a bank would give you what 20,000 dollars? No one in their right mind would sell a cash cow like that.
It won’t hurt to approach the landlord if he’d be interested in selling. If he is, then you could start the dialog about price. I’ve been asked by tenants if I would sell. It didn’t bother me that they’d asked, but I didn’t sell either.
Never hurts to ask. If he is thinking about selling, you are saving him the relator fee. Either way, I would think he would get an appraisal and go with that as a starting point, maybe deducting some of the fee he would have paid to sell it.
We are fairly certain it is paid off. The combined rent on the two units is about $6500/mo. The landlord says he pays a fortune for oil but doesn’t limit our thermostat which we have to crank up so the upper unit doesn’t freeze. Our landlord is very reasonable.
Gowanus – some of it is cosmetic and left over from the days it was used as a boarding house. The big problem is the downstairs floor is dipped toward the back wall. The kitchen ceiling above the dropped ceiling has fallen. I have had two people come look at it for possible repair (with permission from the landlord) but they gave us quotes of several thousand dollars so not an option.
As a potential buyer, how might I get someone to give us a professional assessment of the possible selling price?
Thanks
Though i rarely agreee with hannibla on anything of substance, he’s correct here.
But you’re right, as opposed to hiring a broker and paying 3-6% fee, a FSBO sale is always better.
It won’t hurt to call and ask. To be taken seriously, you have to propose some firm financing because it’s tight in this market and he may not take you seriously unless you have this already thought through vis a vis a mortgage.
Dont expect the owner to accpet 20% below what other buildings on your block are going for. some of the things your mentioning that need repair are cosmetic.
But it never hurts to try.
If the owner has had the property for more than 30 years chances are that it is paid for already. He is going to continue milking the rent until he can. Maybe his children want to sell but not him. What are you paying in rent now if I may ask?