How best to sell property to tenant

[rjak]

We have a single family home in Calgary that tenant is interested in buying when present mortgage comes up for renewal in March 2012.

Present cash flow is positive $75-$100 month with rent of $1800. Mortgage PIT $1683

Value of house about $410000-$420000 mortgage balance about $348000.



What is best way to sell. AFS, Option? What would a reasonable amount be to ask for as a deposit?

Tenant has been in unit for a year and has been very good no issues.

 

[AndreaW]

There are benefits to both ways. I would do an AFS and get as much deposit as you can get - no less than $15,000 and use your closing date on the contract as your mortgage renewal date, meaning they must get their own mortgage before the closing date. Keep in mind that the purchase price on the contract is likely going to be today's value, so hopefully you are fine with that. The AFS is a definite commitment by the buyer to follow through with the contract along with the deposit money you get today. Also the buyer becomes responsible for ALL the maintenance on the property, which should increase your monthly cash flow.....



The option does not guarantee you with a sale on the property. However you can choose this route to hold out for more money for March 2012. But in the meantime, you get no money today and still are responsible for ALL the maintenance in the property.