Renting Out Homes For Sale

2 Replies

Hello,

I'm not even sure what terms to search in here to find out if anyone has tried this before but here's the idea.  There's a few houses in my neighbourhood, 1 has been empty and for rent for a number of months and the one across the street has been for sale for even longer I believe.  I guess you call it a sandwich lease but not an option (not to own).  Basically what I'm thinking of is contacting the owners and trying to negotiate a long term rental (works on homes for sale and empty rentals).  I will promise the owners $1000 a month for 5 years and have permission to sub-lease and am keeping whatever profit I can make (say if rented for $1500).  I figure this sort of strategy would only work for homes on the market for long periods.  The perk for the owner is that they have guaranteed income and they can still sell their house after the term which may raise equity in the home as well.

It's just an idea I'm mulling over and thought I might put out some feelers to home owners/real estate agents (who will want a commission I'm sure).  Just thought I would throw this out to the BP community and gauge thoughts and feedback.

Thanks!

If you can rent it out for 1500, why can’t the current owner rent it for 1500? The idea you’ve got isn’t a bad one but I’d want to do some research before you lock yourself into a lease at 1000 a month.

You need to plan for vacancies and figure out who would cover repairs. Basically what it sounds like you want to do is be a property manager on the property which is cool but a property manager isn’t on the hook for a grand a month if the unit is empty. Usually a property manager markets the house and manages upkeep but the owner still pays for everything the property manager just usually makes about 10% of gross rents (probably varies based on the market)

If your not a property manager but somehow work a deal where you can sublease you’ll want to make sure that you do that right and have a good contract that protects you. Your taking a lot of risk committing to a monthly payment without any ownership in the property. If your tenant breaks something, do you have to fix it? Do they? The owners? If they break their lease how long do you have to get it flipped. If you have to evict someone who pays for that. Lots of stuff to think about. Hopefully my comments help and I don’t come across as a party pooper. I think it’s a cool idea but do your homework first.

@Jarrod English I've heard of a few people that have done something like this, generally they just become property managers like @Andrew Linderer said.

I don't see any advantage in doing this instead of lease options. You would make a lot more money with lease options and ultimately be giving the owner what they really want (a sale). You will also be very hard pressed to convince an owner who wants to sell to lock in a rental for 5 years without even the possibility of getting a sale out of it at the end.

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