Asked to make offer on apartment, advice appreciated

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ger49

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I have been renting a 2 bed apartment for last 5 years. Small development of 12 apartments and 20 houses in desireable area and management company ran by residents.
Landlord purchased property about 13 years ago. 3 years ago I expressed an interest to landlord (who lives abroad) about purchasing, luckily for me it was declined. I was approached a year ago to make an offer and declined because of market conditions. Landlord has now again approached me and i have been asked to make offer. For some reason landlord does not want to sell thru estate agent and will not disclose price they expect. The last apartment in complex that was sold was 5 years ago for 340,000. Currently there is a 1 bed apt in same complex for sale at 160,000 but no takers. I have finance and would be a first time buyer.

Any advice on buying tactics would be appreciated.
Apologies for long post.
 
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Nothing appears to be selling at the moment, unless heavily discounted it would appear, e.g.:
http://www.thepropertypin.com/viewtopic.php?f=10&t=33233
You need to be sure about the finance. You also need to think what if you lost/changed job, changed circumstances etc. You will probably be stuck with the apartment for 10 years or so.
Also, given it's age I would check the status of the sinking fund and mgmt company. At this stage I would think there could be alot of maintenance work (lifts?) coming up.
Do you know what they sold for 13 years ago? Probably around €80K or so?
Would be slow to go any higher than that...
 
ger49 said:
I have been renting a 2 bed apartment for last 5 years. Small development of 12 apartments and 20 houses in desireable area and management company ran by residents.
Landlord purchased property about 13 years ago. 3 years ago I expressed an interest to landlord (who lives abroad) about purchasing, luckily for me it was declined. I was approached a year ago to make an offer and declined because of market conditions. Landlord has now again approached me and i have been asked to make offer. For some reason landlord does not want to sell thru estate agent and will not disclose price they expect. The last apartment in complex that was sold was 5 years ago for 340,000. Currently there is a 1 bed apt in same complex for sale at 160,000 but no takers. I have finance and would be a first time buyer.

Any advice on buying tactics would be appreciated.
Apologies for long post.
Click to expand...

Personally I'd look at it's worth compared to the cost of rental.

Monthly rent x 12 x 14 equates to about 7% gross yield. 7% is about long term average. Not sure if that's a even a high enough yield given current money markets. 7% is therefore an absolute max max price. 10% gross yield in these uncertain times is prob the min price. So rent x 12 x 10 will given you that. Somewhere in between is the value in my opinion and the value to you given you're renting it at the moment.

Mortgage rates are likely to keep rising from current levels due to cost of borrowing on international markets. Government borrowing rates peaked at 6.5% this week. Banks typically have to borrow above this and then add they're profit margin.

Make sure you factor in mortgage rates of 6-7% in your calculations of what you can afford to repay.

Also, offer 15-20% below what you think it's worth as you'll likely have to negotiate up.

You'll likely find 150,000 is very dear for a 1 bed given rental yield.
 
ger49 said:
New to posting, what thread should it be in.
Click to expand...

No, you're fine. It was niceoneted who deleted their own answer who was in the wrong thread.

You're thread heading shows some ambivalence in your approach to this.

I'd start with: do you want to buy anything, anywhere? Yes or No.

If no, that is the end of the discussion.

If yes, then, ideally, where you are now? Or, somewhere else.

If its somewhere else, that is the end of the discussion.

If it where you are now, is it the apartment you're in or a different apartment/house in complex?

If it all comes down you would like to buy your current apartment (you've been there 5 years so you obviously like the complex) then can you and the landlord agree on a price - a price that you would feel was acceptable?

An acceptable price, in my view, and none of us has a crystal ball, is one that would be paid by a purchaser from me the day/week/month/year after I purchased.

So, taking it all into consideration, either offer what you think its worth or ask your bank's valuer to nominate a value.

Its all a risk.

mf
 
remember to factor in the management fee - this could be equal to an extra month's mortgage payment.

also if the owner is not using an estate agent they are saving the fees associated with that so you can knock that off what others are seeking.
 
Hi ger49. I think mf1's advice is spot on. I would also advise ou to think further down the line aswell. Are you going to want to have children soon? If so apartment living probably isn't the way to go if you can choose an alternative.
 
Thanks for responses.
Its a duplex 2 bed apartment, more like a house in well managed estate. Financing is not an issue. No children and it is place i would like to buy. Whats confusing me is that landlord will not disclose price and is asking for private sale and i am unsure what to start offer at. Probably best to use ROBDs post equations and start from there.
 
Also look at what you are currently paying in rent and what you could afford to pay for a mortgage. It sounds like the landlord is keen to sell the property so do the sums and then make an offer you feel comfortable with. Don't concern yourself too much about what the Landlord expects.
 
ger49 said:
Thanks for responses.
Its a duplex 2 bed apartment, more like a house in well managed estate. Financing is not an issue. No children and it is place i would like to buy. Whats confusing me is that landlord will not disclose price and is asking for private sale and i am unsure what to start offer at. Probably best to use ROBDs post equations and start from there.
Click to expand...

The landlord might have a price in mind say 150k but is afraid to say it in case you say 'well apts are selling for 20% below asking to thats what i am willing to pay. If you go to him with a price well then the negotiation process can only see the price going up. If you say I think it's worth 100k the next step is for him to say 'well i have it valued at 170k why not split the difference etc.
Let him come to you with a price or else just go in very low and see how he reacts. He might be savihng €1500 by cutting out the EA which shouldn't come in to your thinking.
It needs to be a real deal for you to give up the situation that you are in now as in the monthly repayments on a mortgage (20-25 years) should be lower than the rent is now.
 
missdaisy said:
make an offer you feel comfortable with.
Click to expand...

Someone wise once posted that this is exactly what you shouldn't do. Make an offer that's so low you are totally embarrassed and ashamed of it. You should be mortified to even propose such a low bid. It's only an opener. See what they come back with. You've absolutely nothing to loose. Worst case they say no and then you're into negotiations.
k
 
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