If you couldn't afford to sell...

[gabity]

If you had just built a house (you are a builder) and had to sell it for X to make a profit but it had just been valued at X-60k what would you do??

I'm not the builder incidently, i'm after buying the house!

We have suggested renting to him. He is away to think about prices. It is the perfect house for us and would be our forever home.

Offer to rent it for a few years and then have first refusal of buying it? Has anyone been in a similar position and what did you do?

[gabity]

Think we would hope to meet in the middle regarding price, if the market was to stay the same in a years time.

But the more we talk about it the more we are thinking 'back to the bloody drawing board!'

[Fiddledee]

So if you rent for a year you can save £12k. Even at his bottom price of £200k, throwing all your money of £170k you would be £182k so short of his bottom price. How are you going to find the remaining £18k? You don't seem to be able to afford it unless you get it for the valuation price.

He would get a gross yield of 3.3% on a valuation of £200k, 3% on a valuation of £220k. This is gross so not taking into account any operational costs. I wouldn't agree to that level of rent to be honest.

[gabity]

See this is what i'm not sure about. Was trying to avoid giving figures, but I might as well - need all the advice I can get.

House valued at £160,000. We expected £240,000 he expected £220,000.

He needs to sell for at least £200,000 to make it worth his while.

We can comfortably get a mortgage of £120k (although could technically get a mortgage for £180k). Have a deposit of 30k (but could be 50k if we used everything). We can save 1k a month if we get the rent for £550 per month, which is what we think it is worth going by similar properties.

Does all that make sense?

Could we go to him on Friday and ask to rent it for a year with a view of having first refusal if he wants to sell it? Or would that be cheeky? Not really sure what arrangment to come to? If any?

[Fiddledee]

How quickly could you save the deposit? If prices did rise (I see pigs flying...) he may want to shift the property and you can't afford it.

What is his return on investment for the rental that you are willing to pay?

[gabity]

He owned the house next to my Mum and the garden. He sold the house 20 years ago but not the garden. He said at the time he would eventually build a house on it and rent it out to provide him with a regular income for his retirement. Which is what he has done.

[lalalonglegs]

Well, renting it would give you an idea if it's your ideal property or not and, who knows, something else might come along in the meantime. It's quite unusual outside the social sector to build a new house just to rent though - he will lose the "new build premium". Are you sure that was his intention?

[gabity]

It was always his plan to rent it out. It was us that approached him to see if he would consider selling.

This way he gets good tennents (my Mum and him are good friends so he knows us), a years rent and then the market value.

Not too worried about prices increasing too much, its a very isolated property and there hasn't been as dramatic a rise and fall as in other parts of the country. However, renting for what we think is acceptable (based on similar properties) would allow us to save a large chunk of money each month building up our deposit.

[mamatomany]

It's all very well not being able to afford to sell for £60k less but if the markets changed he can take your offer or leave it. typically I've found it takes 3 months for them to come to their senses but twice I've changed my mind by then as something better has come along

[lalalonglegs]

You're in Scotland where the surveyor's valuation is stated, right? So if it says its #60k below his price he's very unlikely to sell it. Can he get another valuation that might uplift it a bit and make him more willing to sell? Otherwise, I wouldn't rent from him (tbh, he probably has a ton of money tied up in it and is unlikely to want to do that because he may not be able to get very much out in a BTL mortgage) but I might sit back and wait for his next move .

[LifeInTheSlowLane]

I suppose it depends if anyone else is willing to pay the price he wants, ie a cash buyer who doesn't depend on the morgage valuation. So what happens once you've rented it? If prices increase could you afford to buy it then? I would always be worried that someone else would come along and offer a good price for it while I was renting