Davis, CA · Member since 2013 · 27 posts · 6 votes
Just bought a 200K home at the court steps (I'm sole owner and a real estate broker). Made a mistake as the area is not good to leave a home vacant. I told the owner her options (cash for keys 15 days, eviction or rent until Jan 15 then leave) and she said she was interested in renting the unit longer term. She seems like a really nice person just in a bad family situation. She has a steady job. My goal is to get out of this asap as a better deal has come up and I don't want to invest several months to have her leave, rehab and sell . What do you think of pre qualifying her at $1500 a month, place it on the MLS as a rental sale and do a quick sale to cash investors? Is that a bad idea? I should be able to get enough to get funds back, pay the buyer's agent and closing costs.
I would qualify her as any other good landlord in the area would. Run a background and credit check. If she's a tenant any landlord would want and she can afford the rent long-term, then your buyer will be getting a good deal and you'll get out of the property with minimal damage.
If she's a problem tenant, however, then you're selling a problem to someone that they're locked into for the duration of the lease. Any investor would rather have a soon to be vacant property than one with a problem tenant and a new lease.
I would qualify her as any other good landlord in the area would. Run a background and credit check. If she's a tenant any landlord would want and she can afford the rent long-term, then your buyer will be getting a good deal and you'll get out of the property with minimal damage.
If she's a problem tenant, however, then you're selling a problem to someone that they're locked into for the duration of the lease. Any investor would rather have a soon to be vacant property than one with a problem tenant and a new lease.
Personally, I would not feel comfortable with that - but that's me.
If this is a 200K home now, what was it worth when she got her last mortgage? What were her payments? Were they significantly higher than $ 1500? Then maybe it's doable.
If her payments were close to $ 1500 and she couldn't afford them then, why would she be able to afford them now?
scott: thank you. There is no lease. She was the previous owner and occupies the property. I like the idea of qualifying her and selling it with her as a tenant.
Michaela: she borrowed 370k on it during the peak and her rate was 7% The thing is she is willing to pay rent but that would basically force me into selling the property with her inside. Basically I won't have the benefit of fixing it up and selling it at a premium to owner occupants. I see your point though. Maybe I should file an unlawful detainer as there is no assurance she will be out on the 15th
Wayne: that's true even for California. Again another reason why I may be better off just taking the eviction route and marketing to owner occupants.
Darish Damon Generally previous owners have a difficult time making the transition mentally from owner to renter of what was their own property. I would be very hesitant to buy that situation with anything other than a month to month, move in condition checklist, and a security deposit.
I usually have a policy of not renting to ex-owners but I know many investors that have been successful at that. In one case close to this I did a lease option but of course you would need to know more about her. It was better then renting it because at the time the average priced home in the San Ramon California area rented for 1/2 of 1% per month of the FMV. And I wanted to keep the property, and because only 20% exercised the option back then I expected to be able to keep it. But into her 14th month she bought it back.