Scott City, MO · Member since 2018 · 6 posts · 0 votes
I have an opportunity to purchase a home from a woman who wishes to remain in the home and lease it from me. Has anyone done this? What are some stipulations you place in the lease. Some things I was considering was: 1. They sign a longer term lease. 2. They remain responsible for maintenance and repairs for one year. Anyone have an thoughts? Thanks!!
Use a standard M2M lease and charge her full market rent or higher. You do not want to be tied into a long lease encase she turns out to be a nut job. If you have the skill set to operate strictly as a business you may be OK otherwise don't do it.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
7y
@Allen Collier I would be very leery of this situation. Why would someone want to sell the home and then rent it? There are not many upsides I can see for the owner.
Scott City, MO · Member since 2018 · 6 posts · 0 votes
7y
@John Warren, This lady is 69 years old, and doesn't want the upkeep. They yard is getting too much for her. I have inspected the home. It is in very good condition. She wants the money out of her home and wishes to lease. She originally was looking for an apartment, until I asked if she would be interested in staying and leasing the house.
Use a standard M2M lease and charge her full market rent or higher. You do not want to be tied into a long lease encase she turns out to be a nut job. If you have the skill set to operate strictly as a business you may be OK otherwise don't do it.
Investor · Phoenix, AZ · Member since 2016 · 349 posts · 418 votes
7y
@Allen Collier I'm a bit cynical on this arrangement as well. When I buy a property from someone, I want to be done with them. All their personal prop gone, they're out, done. Period.
My only experience with a seller desiring to do this was she WAS a nut job. Fortunately it was not a request from the seller until it was already in escrow and the answer from me was an emphatic no and the deal still closed.
That being said, if you really are considering this I would dig deeper and turn all the stones to see what might be lurking. And agree that you should not do a long term lease at all. She might balk at M2M, but maybe a 6 month lease? You need to gather intel and do a risk assessment then decide at that point. Don't be suckered in to it because it looks like the easy button. Tenant quality will make or break you as a buy/hold investor.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
7y
@Allen Collier while on the surface this all makes sense, the question you should ask is why she isn't doing a reverse mortgage. At 69, she could get a reverse mortgage and really not have to stress about money for a long, long time. Why sell and rent back? That doesn't really make sense.
I bought a rental and the owner rented it from me for 2 months until she found a new place to buy. My guess is she wants to get the equity out of her home. I'd rent it to her. You can see how she's kept the place up.