How Should I Seller Finance To Tenant
I have a single family home, 4 bedrooms, 2 baths, single story, 1800 sq. ft. in a nice suburb community in Houston, Texas. I purchased the home in 2009 for 121K and I would like to sell it today for 170K. It has had only 1 tenant since I moved out of it. They have children who go to public school and they want me to finance it to them in a 3-5 year period. They want me to keep it in my name because they have bad credit. Then in a set date,, they would close to have the title transferred legally.
They have never missed a payment and have been great tenants. They offered me 60K down payment and then would pay me around 2K per month. The monthly mortgage with Wells Fargo is around 1200 per month. They want me to use that monthly payment to begin to pay off the principal. Then in 3-5 years they will either have enough to purchase the rest or get financing through a traditional bank to close.
I have never been in this situation and I am only getting more and more confused as to what to do because of all the different types of financing structure ideas i've read about. Also, I worry what would happen if they change their mind about buying in a few years? What if there is a fire or flood? Should they pay for everything moving forward (utilities, taxes, MIP, Insurance, HOA, Repairs, etc)? What about home appreciation (it's worth 170K today but not in five years)? How will I be paid for financing the property? Interest?
Any advise or suggestions would be appreciated! I will most likely seek out a real estate lawyer to write up a contract but I would like to have a financing structure idea in mind.