I have a property that I have been renting for about 2 years now and the current renters are attempting to purchase the property. After a long negotiation we have came to a mutually agreeable price however, due to their current situation (finalizing a divorce) they wont be able to go through with the purchase for about 6 months. I would like to lock this in to prevent this negotiation from going back and forth over the next 6 months. Should I have them sign an option agreement or would I be able to do an actual purchase agreement this far out? Appreciate any advice.
Personally, I wouldn't sign anything with them. You never know what can go wrong with a divorce. Have you thought about just listing it to see what interest it creates from buyers? You may get more from listing it than dealing with the current tenants. I would tell them you are going to list it to see what happens until they can afford to actually purchase the home. Just because they are renters doesn't give them first right to purchase the home.
I hope this helps.
Thanks for the response,
I initially had no intention of selling the property as it does really well as a rental. I decided to go through with it for two reasons. The precipitating factor was this couples adamant desire to purchase the property which allowed me to negotiate a price that, after discussing with my realtor, I feel meets or exceeds what I would get if I listed. The second factor was this will allow me to completely pay off my student loans and be able to direct that money into more investments. My worry is that the market in our area is currently doing really well however, 6 months from now that could change and they may try to re-negotiate the price down.
@Brian Eddings , I don't think it is in your best interest to lock them in because you will also be locking yourself in. What happens if your market suddenly takes off? You are locked into that price that you signed a contract for. You can be sued for specific performance, which means you can be forced to sell your house to them if you try to back out.
If it does well for you as a rental, it shouldn't matter that they really want to buy it. Plus they can't even afford to do it right now. They are divorcing yet still want to buy property together? Did I read that right?
Paying off student loans is an awesome feeling - I paid mine off back when you still had to write a check and mail it in, and it was the best, happiest check I ever wrote. Can you get another rental that will do as well as this one does? Bloomington is a college town, right? No shortage of renters in the rental pool, but how does the actual housing market do?
Hey @Brian Eddings I would agree with @Nicholas Crum . If you know your market is doing well now and your 2nd reasoning, which is a good one to pay off debt and re-invest, then I would say you have a better option than waiting for them to figure out what they are doing in their divorce. Anything can happen in 6 months, even less than that time.
@Mindy Jensen, one of the couple is finalizing a previous divorce sorry for the confusion. Bloomington is a college town and I have been able to find other properties that have performed similarly however, they are becoming more difficult to find. I think I will avoid anything binding for now and bring up my concerns with the renters. Thanks for the advice!
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