The lord giveth...and taketh away. My full time contract hasn't even started yet and there's already a life change threatening to eat up the extra money I'll be earning!
My landlord texted me this week with a frenzied request to call her back ASAP. Apparently the mortgage on my flat is up and they were given no choice but to go interest-only at a much higher interest rate than before, effectively making the property a bad investment going forward. She knew how much I love the flat, and was wondering if I would want to buy it at what she described as almost half-off: the property is has a rated value at around $800K but they'd take $450K for it. IF I can't buy it, they'll be forced to sell.
Sound fishy? Why YES IT IS. It is effectively a threat because it forces me into a position where I have to buy if I don't want to move. However I WILL HAVE TO MOVE ANYWAY. As I've lamented many times before over the past year, my entire apartment complex is up for sale (!) because they found something dodgy in need of serious repair in the construction of the complex (!). The repairs won't become dire for another decade, but I'd have to imagine that would affect any impending sale.
The LL still hasn't mentioned that the complex is up for sale to me. I could have brought it up at any point over the past year, but I've been quite busy and distracted and just wanting to avoid the situation altogether with my PhD. This alone makes me very suspicious of her and this offer - I think it actually just gets her out of a bad situation (and me into one!). Passing the buck, as it were.
A few years ago, I would have likely tried to make this work somehow. I absolutely LOVE my flat and the location. I would have liquidated all of my assets to get a deposit together, hired a lawyer for the paperwork, really really tried to argue with the banks to show my credit-worthiness, the works. I've thought about all of the upgrades I want to do to make it even more livable. But now? After the whole apartment complex for sale thing? Absolutely not. For all I know, the insides of this place are rotting and full of black mold.
The thing is, it doesn't actually matter if I had tried to buy. According to many mortgage calculators, even with my new salary, I STILL DO NOT QUALIFY FOR A MORTGAGE IN NEW ZEALAND. As a single person making $100K, I am still extremely risky to banks. It doesn't help that my new salary is only guaranteed until Sept 2026, and my regular contracts are only 1 year at a time. Even with all of that, the most generous mortgage calculators (the ones that don't automatically reject me) say I can borrow about half of what I'd actually need to buy this place (if I actually wanted to). That doesn't even count council rates OR body corporate fees (NZ's version of an HOA). I just plain cannot afford to buy, even in this down market.
I was taken totally aback and got the text and phone call while doing fieldwork, so just told my LL that I'd think about it and crunch some numbers. I'll go back to her this weekend and say that I'm not in a position to buy no matter how I tried to work it. There are a few options at that point:
1. She'll have to increase the rent to keep up with her mortgage. She'll have to give a 60 day notice for this.
2. She'll have to sell. She'll have to give 42 days' notice before I have to leave.
3. She'll increase the rent while selling.
My response to all three will be the same: move, or at least say that I'll have to move if the rent increases. My LL actually has been very, very good to me other than the whole complex for sale thing and kept the rent under market value, so unfortunately anywhere else I move will inevitably have a higher price tag. But a rental increase will definitely wipe that difference out, meaning that I'll just be better off moving. Luckily for me, it is a renter's market in Auckland right now, so there are a few decent options.
It is likely that the flat will sit on the market for ages and ages if she sells, and if I leave, she'll have an extremely hard time finding a new renter at the higher rate, which will mean that they'll be paying the entire mortgage themselves. Any increases to the rent she proposes for me will likely bring it in line with market rent right now. If I leave, she'll try to rent it out at that higher price tag, meaning she'll be competing with all the other flats just sitting on the market right now. She'll be tempted to lower the rental price in that case, which will mean that she's better off just keeping the rent where it is and letting me stay til it sells. For me, it is a win-win (I hope).
The only downside is that because it is a renter's market, I will have a very tough time finding a new flatmate to share the higher rent at my new flat with, making my effective rent go up even further (plus I'll have to carry the costs of the entire rental while finding a new flattie). And possibly absorb the cost of furniture to boot.
Why do I need to get a flatmate if I'm making $100K a year? Great question. The thing is, I just can't afford to live alone yet. If I do not find funding for the future in the next year, my income will go right back down to where it is now in Sept 2026. I do not like moving, so I really want to find my next forever rental home. In order to guarantee that I can afford my rent in Sept 2026, I have to run some numbers. More in the next post.
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