Lender Will Not Approve Current PM Contract (Need Advice)

[Hamp Lee III]

I’m currently under contract on a home in Texas, and the final documents the lender requires are a tenant agreement and proof of the security deposit and first month’s rent for my current home, which I plan to keep.

The property manager I’m working with will use my home to house homeless veterans and senior citizens in a transitional setting, so it won’t be a standard rental. The PM is guaranteeing rent payments to me, but the lender won’t accept the contract as it’s written. I can add a statement clarifying that the payments are guaranteed regardless of occupancy, but I’m unsure how to handle the receipt for the deposit and first month’s rent in this nontraditional arrangement. The PM is not willing to provide any advance payments to me.

I do have a real estate LLC, and I want to make sure everything is done properly. This is the last hurdle before closing, which I'm hoping to do in the first week of August.

If anyone has been through something similar or has advice, I’d truly appreciate your insight.

For context, this purchase is just an upgrade, so I can walk away if needed, but I’d prefer to move forward the right way. Thanks in advance.

[Michael Smythe]

 You will need a standard lease from your PMC or you will have a long, drawn-out challenge trying to get an underwriter to step outside their familiar box.