Buy an apartment, keep the seller
In tight housing market, renting to the former owner gives buyers an edge
With soaring maintenance fees in a tight high-end market, a growing number of sales are coming with a catch: the seller as a tenant.
Brokers say the growing practice gives buyers an edge when making offers and can offset maintenance costs if they’re not in a rush to move in. Sellers, meanwhile, have more time to plana their next move, according to the Wall Street Journal.
That was the case with retired fashion designer Rosemarie Roussel, who sold her Midtown co-op to her neighbors in 2015 for $585,000. The buyers paid $36,000 above the asking price, and let Roussel stay on as a tenant, paying $2,800 a month in rent.
Hostess Brands’ Daren Metropoulus bought the Playboy Mansion for $100 million in Los Angeles last year. What allowed the deal to go through is that Metropoulus agreed to let the 90-year-old Playboy Hugh Hefner live out his days in the home, paying a rent of $1 million a year.
Some of these deals can be tricky. It can be harder to evict the former homeowner if the agreement lasts longer than 60 days. And while damage deposits can be included, big problems fall to the new owner, Adam Wilner of Greenberg and Wilner told the Journal. Renting a property for too long can jeopardize financing terms.
But sometimes, it works out just fine. Developer Mohamed Hadid, father of models Gigi and Bella Hadid, has also been renting Le Belvedere, a roughly 40,000-square-foot chateau he sold for $50 million in 2010. “Six months became a year, a year became two,” he told the Journal. He pays the buyers, two Asian investors, maintenance costs and rent.
The mansion is now on the market for $85 million. [WSJ] — E.B. Solomont