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Been offered a 4 bed house at huge discount, in a rubbish area.

(14 Posts)
Imonlydancing Thu 21-Apr-16 10:42:51

We have just been offered a friend of the family's house at a huge discount. It's in a fairly rubbish part of London - without outing myself its a split borough. The East is very rough with stabbings and a big gang presence but this particular street is a very nice little pocket. The house is 4 bed and huge. We live on the West side, nice schools and very leafy but in a much smaller flat but which would do us for 5 years max. The plan before this offer was to hold out and sell this and our other 2 flats in order to finance a big move and stay on the west. To give an idea of price diff, the discounted house is £400k and our little flat here (2 bed) would go for £330k.

So with this offer we have a few options and I am sure there are loads we haven't thought of :

1) Sell the largest of the investment flats (in the nice area) to finance the discounted house buy, live here and rent to tenant
2) Remortgage this flat to finance the house buy, live here and rent to tenant
3) Sell this flat and the smallest flat and actually live in the house
3) Go halves on the 4 bed with a relative by selling the smallest of the flats and either live there (logistical issues abound with this option as relative may want to store stuff in the house, or live with us) or rent to relative/tenant

DP is very keen to sell one of the flats off and buy the house but they are the jewels in our crown, because they are very central to London transport and in a nice area without huge amounts of crime. We'd be selling that for a larger place but in an area which has not had its house prices rise proportionally to the rest of the borough.

We don't know what to do. It would be such a shame to let it go!

AwakeCantSleep Thu 21-Apr-16 10:53:00

Why are your friends offering you this house at a huge discount? Are they likely to change their mind? What is the full market value? It seems very odd that they would deprive themselves of capital in this way.

Your stamp duty on a 400k purchase if you already own property is 22k alone.

Personally I'm in the "location, location" camp. You seem in a very good financial position with existing investment properties in very good areas of London. Unless you have lots of other investments I'd be looking to diversify a bit, away from property. I certainly wouldn't sell the properties with excellent transport links.

Floggingmolly Thu 21-Apr-16 11:00:35

A huge discount on what? Do you know what the approximate market price would be? If they are genuinely underpricing it you've got to ask yourself why.
There'll be a very good reason they're not maximising their profit.

Imonlydancing Thu 21-Apr-16 11:08:00

The friends have known the family for 30+ years and DFIL has helped do the house up over the years, because of the crapness of the area the seller is worried it will go to someone who will trash his hard work and he wants someone to have it who will look after it. The discount is about £50k - £75k.

The other thing is, we could move a little further out of London and find ourselves a 4 bed for £400k in a nice area anyway. But as DP doesn't drive he is reluctant.

I am feeling like we should let it go, although it would be such a shame to do so. I really do not want to sell the smaller flats for half a house in a crap area. I like option 2 I think.

Imonlydancing Thu 21-Apr-16 11:12:10

This is not uncommon in the area we live, my DM lives in the same area and is also selling to her neighbour of 25 years in a private sale.

Floggingmolly Thu 21-Apr-16 11:16:17

You don't sell your house at a massive discount to do a friend of the family a favour, you sound incredibly naive...
If the seller is so worried about all the hard work they've put into the house why don't they continue to live in it themselves? When you sell a house you don't give a shiney shite what the new owners do with it; you've moved on and it's no longer anything to do with you confused
I strongly suspect you're about to buy a pig in a poke.

idontlikealdi Thu 21-Apr-16 11:18:33

Noguchi g you have said makes me think I would buy it. It sounds a bit bizarre to be honest.

Imonlydancing Thu 21-Apr-16 11:20:54

He is moving to his native country and wants a fellow native to live in it. Hence offering it first to his friends son.

Floggingmolly Thu 21-Apr-16 11:26:05

hmm

AwakeCantSleep Thu 21-Apr-16 11:39:04

This makes no sense at all. You are thinking of letting the house out. Are you going to exclusively rent it to natives of this friend's country? Does this friend suffer from the illusion that they have a say in who lives in the house post completion?

I hope your friend seeks independent financial advice.

(Nothing wrong with a private sale btw. That's very different to a sale significantly below market value for what seems like sentimental reasons.)

I wouldn't be able to go through with it in your shoes - it would feel like exploiting a friend's naivety for own financial gain.

Imonlydancing Thu 21-Apr-16 11:47:20

We don't care if natives live in it, he is just a close friend of DFIL who wants to do us a favour so that we can live close to family (they are neighbours). The older generation of this road all moved in around the same time and being of the same ethnicity, looked out for each other.

I am reluctant to live in it because of the crime and that we would have to sell 2 of our good flats for it. The size and condition are the main draw, this man is an ex builder who has sold his other houses at large profit. That's the only reason we are thinking of letting, perhaps to relatives so that they could live close to DFIL.

I just wanted to know what other people would do....

Floggingmolly Thu 21-Apr-16 11:59:11

So... He's going to sell the house to you (at what may or may not be a huge discount in market value) so you can live close to your relatives. You don't want to live in it, but are happy to buy it anyway so you can let it to relatives so they can live close to your (joint) relatives.
What a lovely bunch of philanthropists you are...
There's something quite off about this whole thing.

babewiththepower Thu 21-Apr-16 12:03:19

If I were you OP, I would try and raise the money from remortgage or other means to buy the house, either yourselves or with the relative. Then you have not lost anything in order to gain the house.

FWIW, my parents bought their first house from a family member for a discount under similar circs. Not £50,000 though but probably similar at the time.

Imonlydancing Thu 21-Apr-16 12:07:41

Thanks babe. The other thing is that if we do not buy it, one of my SIL's or BIL's may well do as the offer is on the table to all of us. We could go halves with one of them of course, but then comes the problem of selling later on.

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