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Can you sell with a tenant?

Discussion in 'Dubai property' started by Poorboy, Jun 13, 2008.

  1. Poorboy

    Poorboy New Member

    Was wondering with the new law which means if you take on a tenant they can stay there for 3 years,many investors may want to sell within that period.
    So,is it easy to sell a unit with a tenant?
     
  2. kk1974

    kk1974 New Member

    I've got a list of people looking to buy tenanted properties. :)

    It seems quite hard to find them though.
     
  3. Poorboy

    Poorboy New Member

    Ok,I'm surprised but thats good.However,how about a property for example
    where the tenant has just paid the owner 1 years cheque and he wants to sell? Would your clients be willing to buy even if they had to wait almost a year to receive any rent money?
     
  4. kk1974

    kk1974 New Member

    That seems like quite a stupid thing to do.

    How can you expect someone to buy a property like that?

    If that is the case, then any sane seller will compensate the buyer by either giving him a cash-back for the outstanding months rent or will give him a discount for that amount.

    But then, this world is full of inexperienced people and also full of those who will take advantage of ignorant. :(
     
  5. Poorboy

    Poorboy New Member

    Jesus back off dude ! I was merely asking you a question as I dont know
    how it would work in this situation !
    It struck me as strange that you would have a queue of clients who would buy with a tenant.Your explanation of giving money back or a discount however makes some sense.Although,if you want, say 900.000aed for your unit and you've just been paid 80.000 for rent,you're just going to offer it for 980.000 less 80 for rent so it doesnt really make a difference.
     
  6. kk1974

    kk1974 New Member

    Sorry Jake, I was not referring to you. :)

    I was just talking in general. I didn't understand that you actually have a property like that, I thought you were talking hypothetically. Apologies, I really didn't want to offend.

    Yep, it doesn't make any difference to you, but it's a psychological thing and it will make it much easier for the buyer. All the cash-back deals work in the same way, and people fall for it every day.

    There are plenty of investors in UK who are not into speculative investments such as off-plan, they want to benefit from long term hold.

    Just to give you an example, I have a guy who is looking for 10 tenanted units with positive cash flow in Dubai. He simply wants the peace of mind, steady income and some decent capital appreciation. In Dubai he would get both.

    Also, it is much easier to get mortgage on the rented property. Most of the banks would do it even for foreigners as long as you can show the history of payments. Much much easier than for off-plan.

    There are lots of benefits in buying tenanted properties, it all depends on your investment criteria.
     
  7. Poorboy

    Poorboy New Member

    Ok sorry misunderstood.
    I was talking hypothetically.I have a newly rented new unit and was wondering what would happen if I wanted to sell within the three years.
    It does seem however that anyone with any intelligence will know that any 'discount' will be added on anyway before its taken off.
     
  8. kk1974

    kk1974 New Member

    My fault too. When I re-read my post, I've seen that its no wonder that you took it wrong way. That's the problem with written communication...

    It would depend on your contract and the rent you are charging. I would guess that lets say in 2 yrs time the rents would go up significantly, while you wont be able to increase for more then 5% (unless the law changes again).

    In that case it will be very hard to sell it for its full value.

    Btw, is there any reason why you took 3 yrs contract?

    For 1yr contracts it would be easy to find the buyer, provided the rent is levelled with the market rate.
     
  9. Poorboy

    Poorboy New Member

    Hi,
    actually this all relates to what I've read recently that due to new laws,a new tenant has a right to stay for 3 years.Got to admit havent checked it out properly yet.
    Have only signed a 1 year contract.Although its still relevant to me incase for whatever reason I decide I want to sell,say with 6 months left to go.
     
  10. kk1974

    kk1974 New Member

    Do you have any reference for this?

    It would be hard to believe that you will have no way out, 3 yrs is too long for standard tenancy agreement, it just wouldn't be practical.
     
  11. Poorboy

    Poorboy New Member

    You wouldnt sign a three year contract,I assume the tenant has a right to sign two more yearly contracts.I need to find out.
     
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