Leasing a property as a first home buyer

[aitsmoi]

I am a first home buyer and have paid my 0.25% and am currently on a cooling-off period. If everything goes well, within the next 8 days I will get the property, a 2-bedroom unit.

There is a tenant currently living in the property. As I've understood, a first home buyer can lease a property for the first 11 months after settlement. The place I am currently renting at is around $50 cheaper than the rent charged at the new property. So if the current tenant doesn't want to move out soon, I can keep them there for the next 11 months.

My questions:

If they decide to move, what's the process of finding a new tenant and usually how hard is it to find a new tenant?

How much does the real estate charge in commissions each week out of the rent?

What are the other costs involved?

Based on my situation, is it really worth renting out the new property or is it too much of a hassle?

 

[cmason]

If you were to do it I wouldn't use an agent as they are just going to take a piece of the $50 you have left over, the commission is different in different states and can range between 5-9%.

I would only do it if the current tenant is willing to stay on and if they have a current lease which will end before your 11 months is up. As soon as the lease is up then you move in.

If they happen to move out beforehand I don't think it is worth looking for another tenant as you would only be putting them on a short term lease and only one term at that.

 

[Propertunity]

If they decide to move, what's the process of finding a new tenant

Advertise for one and do reference checks. Make a selection and sign up a lease. Get a PM to do all this for you.

and usually how hard is it to find a new tenant?

Vacancy rates are low at present is a lot of places but you have not said where your unit is?? If in Sydney, it should be relatively easy.

How much does the real estate charge in commissions each week out of the rent?

Somewhere between 5.5% - 8.8% and most usually 7.7% which is negotiable.

What are the other costs involved?

Lease preparation fees $17, statement fees $5 pm. usually.

Based on my situation, is it really worth renting out the new property or is it too much of a hassle?

Based on your situation of buying a tenanted unit, you will need to comply with the tenancy legislation to terminate an existing tenancy or an expired one running month to month
If you rent it out before moving in their will be some CGT liabilities if you ever decide to sell in the future.
Also you need to move into the property within 12 months of purchasing to still qualify for the FHB grants & SD relief. Don't leave it till the 11th month to take action to get rid of the tenant. If they drag their heels getting out (some can take a few months if they refuse), then you could be in a spot of bother.