Our renter wants to buy the property

Member since 2021 · 20 posts · 3 votes

We have a lake house in NY that we are currently leased until June 15, 2024. The renters have asked if they could buy the property. We might be interested if we could find a place we prefer in Maine closer to our children. We might also be interested in doing a 1031 for another property. How best to formulate the deal that will give us sufficient time to find the new property in the current environment. Thank you, David

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
Quote from @David Gorman:

We have a lake house in NY that we are currently leased until June 15, 2024. The renters have asked if they could buy the property. We might be interested if we could find a place we prefer in Maine closer to our children. We might also be interested in doing a 1031 for another property. How best to formulate the deal that will give us sufficient time to find the new property in the current environment. Thank you, David

Get it under agreement at X price and have in the agreement closing will take place after you find another property as part of a 1031 exchange. they have it rented until June of 2024 so I would think they would be fine with those terms at this stage.
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Corby GoadeBusiness Member
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
3y
Quote from @David Gorman:

We have a lake house in NY that we are currently leased until June 15, 2024. The renters have asked if they could buy the property. We might be interested if we could find a place we prefer in Maine closer to our children. We might also be interested in doing a 1031 for another property. How best to formulate the deal that will give us sufficient time to find the new property in the current environment. Thank you, David

Have your realtor comp your property and start there. Many people sell to tenants, neighbors, etc and leave tens of thousands on the table. It's okay to sell at a discount for convenience, but it's not okay to sell without knowing the retail value of your property and making an educated decision.

Beyond that, talk to an intermediary to make sure you qualify for a 1031 and you understand the timelines and your options. They're honestly pretty simple, but it can be stressful if you don't plan and know that you might be making some rash decisions if you can't get exactly what you want in the timeframe that you have.
Best of luck!
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
3y
You have conditions on how you need to sell; put that in writing with them. If they don't agree, then you don't got anything to worry about.
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Dan WeberBusiness Member
Realtor · Portland, ME · Member since 2015 · 656 posts · 552 votes
3y
@David Gorman make the offer "subject to the sellers finding suitable housing by X date." That way, if you don't find a better option by that date spelled out in the contract, then you (as the seller) can terminate.
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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
3y
@David Gorman, I'm hearing some great things for you to work with here. From the 1031 perspective, the short time frame to find a new property is always a bogeyman for people. When a tenant is buying from you it's a great opportunity to ease that fear of the short timeline. As several people have said, Arrive at an agreement that allows you to close the sale to them anytime within the next 12 months at your convenience. Then, whenever you find that perfect replacement property you can execute the contract.
They have to rent for the next 12 months anyway. So they are ready to wait that long. And if you find something before their lease expires that is a bonus to them as every month is one less month they have to pay rent.
This is a great scenario.
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