Can I live in a property during an assisted sale?

Trebor38

Hi all,

I am in the process of arranging an assisted sale with a client who doesn't have a mortgage on the property and does not live in the area, which is one reason he is selling.
The property needs considerable work to achieve his asking price, and to achieve the market value. I want to get the owner his asking price, and with the work potentially an additional £15-30K, but I am struggling to make the the numbers work for a quick turn around.

I am currently looking for somewhere to rent and so thought it might be a good idea if I could rent this place for 12 months, pay half rent to the vendor and use the other half to buy materials, and renovate the property over the 12 months while living in it. Then the renovation costs are mainly paid for by the rental income, as he is short of cash and it isn't financially savvy for me to fund the work... Because of the numbers.
The owner of the property thinks this is a great idea, but I wanted to check where I stand legally. I know assisted sale contracts are legal contracts, and don't know if conditions come into play if you are a sole trader/limited company.

Anyone knowledgeable in this area your input would be appreciated :money:

Trebor38

I have read somewhere that you can't rent it back to yourself but can rent to your limited company, and live in it. Don't know how accurate that is.

eddddy

Trebor38 wrote: »

I am in the process of arranging an assisted sale with a client...

...I am currently looking for somewhere to rent and so thought it might be a good idea if I could rent this place for 12 months....

When you say 'client', what business are you in? It sounds a little strange to want to move in with your client.


It sounds like you might be 'out of your depth' with your plan. People who try to do things which are 'out of their depth' tend to lose money.


FWIW, "assisted sale" is a phrase that's often used by very dodgy companies, who want to take advantage of people in financial difficulty.

Maybe you should just say to your 'client' that you'll do some work on their house, and they don't have to pay you back until they've sold it (if you're prepared to take that level of risk).

babyblade41

Well that went well

[Deleted User]

See ya, can't see anyone else helping.

paddy's_mum

There are times I wish this forum had a button which is the exact opposite of Thanks!

AdrianC

I'm going to play this one with a straight bat, just in case Trebor decides to reconsider his earlier replies.

Trebor38 wrote: »

I am in the process of arranging an assisted sale

What do you mean by that? Who is assisting the vendor, and how?

with a client

A client of yours? What business are you in? How is this client relationship relevant to the sale?

who doesn't have a mortgage on the property and does not live in the area, which is one reason he is selling.

So the property has been empty?

The property needs considerable work to achieve his asking price, and to achieve the market value. I want to get the owner his asking price, and with the work potentially an additional £15-30K, but I am struggling to make the the numbers work for a quick turn around.

If spending £30k will only add £30k to the sale price, why bother doing the work? Sell as-is. The end result is the same for the vendor...

Is the property inhabitable? Would it remain inhabitable during the work?

I am currently looking for somewhere to rent and so thought it might be a good idea if I could rent this place for 12 months, pay half rent to the vendor and use the other half to buy materials, and renovate the property over the 12 months while living in it. Then the renovation costs are mainly paid for by the rental income, as he is short of cash and it isn't financially savvy for me to fund the work... Because of the numbers.
The owner of the property thinks this is a great idea, but I wanted to check where I stand legally.

Simply - you would be a tenant, and he would be your landlord, with all the rights and responsibilities of that.

Of course the rent can be paid "in kind", through the provision of building materials and services - but it's very hard to account for the landlord, with tax complication issues, and with zero control over the quality of the work.

I know assisted sale contracts are legal contracts

So are tenancies.

and don't know if conditions come into play if you are a sole trader/limited company.

A sole trader is a person who happens to be doing some business activity. The landlord is a sole trader. The tenant is just a person.
A limited company is not a person. Does your "client" run a limited company which would be acting as landlord - because the limited company owns the property? Would the tenant be a limited company? Or would they be... people?

There's so much that you've not begun to explain before you can get any sensible answers to the situation - simply because we don't understand the situation from the little you've told us.

Trebor38

Wow.... just wow!!!!!!!
I've been told I have to be "nice" to other members, even if they speak down to me like I'm a piece of crap, when I am trying to do something ethical and help someone who has approached me.
I must have written it completely wrong because !!!!!! are you all talking about?
Living with the client? Work costing 30k? ...Eh?
What has happened here is I've asked a question about property investing strategies to a bunch of people who haven't got a clue, and more suited to solving problems like how to get 25p of a bag of carrots at Asda, because when asking the same question, perhaps worded a little differently, I got a completely different response. Let me try again, although I won't hold my breath. This is more an opportunity to help you understand thank looking for an answer, because I already have one from a better source....

I have been involved in buy to flips and worked hands on as a jack of all trades for a number of years now, mainly for family members, but feel this has become too much like hard slow work.
So I read some books on creative investment strategies looking for a new approach to property investing, and wanting to go it alone as nobody thinks like me.
I have been approached by a property vendor who inherited a house but has had it on the market for 2 years with no interest, and also has had negative experience with nightmare tenant, and asked if I would be interested.!
The property needs a lot of work after the tenants left it with a lot of damage, and the vendor's asking price, while BMV, is still out my price range for cash, and even using some creative investment strategies I can't make the numbers stack up for a win win.
Asking price 100k
Current market ceiling 130k

I want to help him achieve his asking price, and with a bit of work even the market value. There is no mortgage and no renovation money. The property is currently sat empty.!
I am reluctant to agree to an AS where I fund the renovation simply because there is no guarantee the property will sell even after a renovation, plus there's brexit, and the slowing of the global economy which could mean anything.!

Now I don't know if this is OK/allowed, hoping someone can give advice; but my idea for an AS or maybe a Lease Option, not sure, is to rent the property from him myself and pay him rent at an agreed reduced rate (50%), so he is getting cash flow from the property, and with the other half of the rent I buy materials to carry out the works over an agreed period e.g. 12 months. Obviously I would take care of all maintenance and out goings as a normal tenant would. So relieves him of any burden, puts cash in his pocket, and his second home is renovated at no cost to him. (Maybe a little cost when doing big jobs like kitchen and bathroom).

With either an AS or LO can an investor (me) live /rent the property in the agreement, is it allowed?

Then after the 12 months or when all works are complete, and the property sells assuming market value, the vendor gets his asking price, plus solicitor/agent fees returned to either myself or vendor, whoever pays, and then any profit is split 50/50.

That doesn't sound as good now. Maybe I should get anything over the asking price, and after fees are paid. Up to a certain amount e.g. 15k, and then split whatever is left.

What do you guys think? I'm just starting out with this approach so any help offered will be gratefully received.!
Main thing is, can I rent the property to myself under those agreements?

Thanks

babyblade41

I can't see any of the above working , certainly not for the vendor.

Their best bet would either reduce the price dramatically for a quick sale or auction.

I don't mean to be rude to OP but I think your idea is borderline taking the p and if I was a family member of the vendor I would tell them just to get it sold well before squatters move in and do even more damage

AnotherJoe

Trebor38 wrote: »

What do you guys think? I'm just starting out with this approach so any help offered will be gratefully received.

I think that as you said, the numbers dont work, so find another client / property.

When I was in business we'd sometimes get offers to bid on jobs where the prices were such that we'd have been working at a loss (or just at a profit margin way below what was acceptable). We declined to bid on those.

You should do the same on this because from what you've posted you would literally earn more more flipping burgers or stacking shelves.

caprikid1

If you are inexperienced with something and you get approached with a deal, chances are no one else is interested or can make the numbers work.