Financing Options for Current Tenants to Buy Rental

[Craig Rowe]

Hello - I have tenants in a rental home in the Cleveland area who have rented the home for the past 12 years, excellent tenants, always pay on time, etc. They're a married couple, both self-employed. They want to buy the home from me but are running into issues with debt to income ratio, so not eligible for FHA. They do not have the 20% to put down on a $209k purchase price. They currently pay $1350/mo for the rental.

Are there any creative options for making this work or something we're missing?  Could I loan some of the deposit and retain equity in the home for when they eventually sell or buy out the rest of the equity?  

[Ellis San Jose]

You have many possibilities:

Research Contract for Deed & Seller Carry back financing.

If they were able to qualify with a non QM lender for the 1st Mortgage  you could possibly have a 2nd position loan with an equity participation component.  Be sure to consult with an attorney to review & discuss.