We're in a situation where we're trying to buy a SFR (we plan to turn the walk-out basement into a separate apartment to rent out, while we live upstairs). The sellers want to lease back, while they find a home to move into, and we want to rent it to them, since we realistically don't want to move for another few months. So, it could work out beautifully! But here's the thing: They purchased the home 10 years ago for 180K, and we are now purchasing it for 370K. Obviously, their mortgage payments have been quite low, but our PITI payments will be roughly $2100/mo. Is it unreasonable to ask for that full $2100? I mean, really, we could just get another renter to pay that full amount, or we could just move in earlier than we'd like. The sellers asked if $1500 would be ok?! That seems insane to me. Why would we do that? We are new to the idea of lease backs, so can you let me know if I'm missing something here... What would you do? Thank you!!!!
No reason to lose money renting to them, unless you got a KILLER deal. Usually rentbacks call for higher rents than market, not lower. of course, those situations I've seen have always been short term. you make it sound like this can be several months. in that situation, I would tell them they have to pay market rent, and provide security deposit. In addition, put in your contract that $5k-$10k will be kept in escrow until they move out, with the stipulation that if you are forced to evict them, the escrow can be used for eviction costs. Other option is to delay closing until they find a new house.
Something else you need to consider is your loan terms. Is it an owner occupied loan? If so, you may be in violation by not moving in for several months. Make sure everything is peachy with your lender if this rentback is going to last more than a month or two.
@Andrew B. --this is great stuff. Thank you so much for the thorough answer. I hadn't really thought about the owner-occupied loan situation, but that makes perfect sense! Also, I imagine insurance might come into play as well. Yes, the lease back would probably go for around 2-3 months, I would say. I looked up rent-o-meter.com (I think it's fairly accurate) and it said that houses in a 5-mile radius, same number of bedrooms had rented, on average, for $2060, so my number seems to be right on. And no, we did NOT get a killer deal. We're paying, straight up, exactly what the property is worth, based on comps. We haven't signed a contract yet, so now I'm super tentative. We're still in the midst of negotiating the offer... Clearly, we have some talking and thinking to do.