Has anyone had success purchasing the home that they were renting through a property manager?
We are renting a condo in an area that's experiencing tremendous rent and home price increases, so much so that if we refuse to renew our increased lease, we'd be looking at spending 2-3x on rent for a similar property. This is, somewhat conveniently, almost exactly what the total cost of monthly expenses would be if we purchased the unit at its estimated cost when comparing to similar units in the complex that recently sold. We also really like the location and would rather eat an increase in rent here than relocate in our city, which complicates things a little further.
My wife and I have floated the idea of approaching our property manager and asking if the owner has any willingness to sell, but we are also trying to imagine possible consequences of starting that conversation -- in particular, should they opt to sell but not to us. There are also some things that we'd like to update in our unit that would fall under the landlord's obligation while we are renting (plumbing issues, windows and blinds need repairs, etc.), so we're trying to gauge if we should even have this conversation before we request repairs.
We've thought about a few different options, and I'd be interested to hear from others who have tried anything similar.
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Just ask to buy it and see what happens.
- Pro: skirt all the bullshit and just get to the meat of the issue, which is that we want to buy the property.
- Con: They check the price, decide to sell to someone else and we're back in "rent the same for more but in a worse location" territory. If they decide to sell to us, they might resist performing repairs because they'll just offload it to us eventually.
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Wait for repairs to be done, then ask.
- Pro: get our unit fixed, improve QOL immediately.
- Con: They might be less likely to sell to us if they think we were trying to get stuff fixed so we didn't have to fix it after buying.
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Offer some kind of plan to cost-share improvements or fixes in exchange for rent adjustments within the initial approach about buying.
- Pro: Get improvements/fixes to the house quickly, reduce rent expenses regardless of if we are able to buy or not.
- Con: They essentially get to subsidize improvements to their unit for long-term gain while we only get short-term benefits.
I tried this with my old landlord. Similar situation where housing prices were rising quickly. I made an offer for the house at a price I felt was reasonable, thinking of the caved in ceiling, roof with a tree sized hole that'd gone without repair for half a year, and a half dozen other serious issues.
Figured I'd save him having to fix it to put it on the market, and also save us from the hassle of moving.
Dude told me to get stuffed, we moved out, and he put it up for almost double the price I offered after doing the cheapest most superficial repairs to mask the roof and foundation issues.
It sold in about three months. Way longer than it takes most properties in our area to sell at the time, but it still sold. I haven't looked to see what price he got for it, but I'd bet it's at least 60% more than I was willing to pay.
Markets like these are rough. Sellers have control. If you make a offer, don't expect deferred maintenance to save you much. Even if it's serious stuff that'd sink most sales. Cause seller's market.
If you decide to do this, make sure your financing is in order before you approach them. This way, you can promise a quick sale, and it gives you a limit on how much you can pay.
Just want to emphasize that I think this is the approach. If you get your pre-approval now:
Otherwise you’re giving them time to think and doubt your offer.
What is your relationship with the property manager or owner like? Also, does your area have high turnover in rent, like near a university?
If you're property manager has been professional and above board up to this point, and you are in an area where people into their careers are renting, then I can't imagine your property manager or owner would take offense at the question. The only thing that gives me pause is if you ask to buy, they say no, and then you ask for repairs, they could take it as sour grapes.
My best advice is to approach them saying you think the unit needs some repairs, and it got you thinking about whether the owner would be interested in selling as you are thinking about buying anyway, like the area, and selling to you would let the owner avoid the cost of repairs. That way you are disclosing the repairs upfront with a reasonable line of thinking leading to the ask.
However, make sure you know what actual comparables are for the market and know that you can afford to make the purchase.
Anecdotally, I just bought a house is a major metro area in a very competitive market. People were waiving inspections, appraisals, and all sorts of crazy things. Zero chance of getting seller concessions on a market like that. I was willing to waive an inspection on the home I bought because it was a full reno with permits, but insisted on the appraisal and offset that by offering $5,000 over appraisal, up to $30k over asking. So I got creative and turned the need for an appraisal into a potential boon for them.
Best of luck, and do your homework and be realistic. Don't go into this with rose colored glasses.
Your landlord would have to be living under a rock to not have noticed the massive increase in housing prices. You mentioning it is unlikely to lead to them selling it to a third party IMO.
Depending on your landlord, some will be ass holes like the others commenters experiences, sometimes they actually just want out and will deal with you rather than involving 3rd parties.
If you make an offer they will of course avoid doing any repairs. Not doing repairs may be motivation for them to consider selling rather than dealing with it.
I've lived in 5 different towns in 5 very different areas in my life. Between me and my immediate circle of friends, we have had the "pleasure" of working with more than 20 different landlords.
Of those landlords, only 2 of them actually did anything more than superficial repairs in a timely manner when an issue was reported.
When it comes betting on landlords, selling, and rent, my money is on "Make superficial repairs and raising rent" 100% of the time.
As a landlord/investor, when I have a place thats accelerating in rent and value that's the last place I want to sell. But those are the places where the tenants offer to purchase. Personally, Id be interested in selling the slow moving places but no one asks about those.
Generally accurate, but you never know - you know? They might be strapped for cash at the moment, about to retire, about to move... Who knows! You don't lose much from asking.
We dealt with a property manager at our last rented place.
One thing to ask yourself: "What happens to that company if the sale goes through?" They'll be out a contract which is making them money. Based on the not-horrific-but-not-great experience we had with them, I'd expect one of two things to happen after you approach them with an offer.
Those companies are business out to make money, the Internet says they make 4-12% of your rent each month. Each place isn't a lot, but they aren't going to be happy about losing future profits.