Seller Financing With Current Tenant
Hey Community!
The lease for one of my rental properties expire in a month from today. The tenant do not want to keep "throwing away money on rent" but is not in a position to purchase a home due to her credit score and is wondering if we can do seller financing. While I understand seller financing on a high level, I have very little deep knowledge on the topic. The property is worth about $200k in the market today and rents for $1500-$1600. I have close to $90k+ of equity in it and was considering refinancing and keep renting it out.
While I would prefer to refinance and keep renting it, I see some benefit of doing seller financing. Do you guys have any insight as to typical/reasonable terms regarding price of home, interest rate, down-payment, term of loan, etc. or is that all up to the buyer/seller to negotiate? Also, are there particular things, other than down payment, that can be done to reduce the buyer's incentive to default on the loan for whatever reason? My thoughts are to ask the tenant to extend the lease for 6 months with the option to buy with owner financing at end of the term as it will give me more time to get an attorney to put together a contract etc. However, it seems as if I would need to get the general terms of the owner finacning agreement in place prior to renewing the lease.
I realize there is a lot here and much of it probably depend on the tenant as well as my situation so any details you guys need, please let me know.
Thanks,
Christian