Updated about 7 years ago on . Most recent reply
When owners become tenants - risk factors?
I'm negotiating on a property where the current owners would like to stay for 60 days past close. We have agreed on a rental rate. I'm trying to figure out the things I need to think about to best mitigate risks here - I assume a security deposit in the escrow account? I'm investing from out of state so I have not met the owners. The property is pretty clean but I'd like to glaze the bathroom. Would you try to get that done while they are renting? Anything else I should be thinking about here?
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@Courtney M. Yeah, I’d want to know why they are staying past close. Is it waiting for their new build to be ready (good reason), or are they behind on their mortgage and getting out?
Their rental rate should be higher than normal, and the security deposit should be higher as well. Also have a provision as to what happens after 60 days. Rate is $100 per day (or something similarly high to dissuade them from extending their time there). Of course if everything is going well and they ask nicely, you can always agree to extend another 30/60 days at the standard rate too.... but only if everything is on the up and up.
I would not try to do much work with them in the house. It’ll be a pain for them and for you.