Has anyone done a purchase where the vendor rents the property they sold? Can u screen them first like any tenant (credit check, references) as a condition for purchase? what numbers do u crunch to know what`s behind the curtain? (why would they sell if rent might be higher than their mortgage? -- is it they have a high interest mortgage-but they could refinance if this was an issue right..., or how do u know if they have equity...too little, etc.? thanks
Vendor to rent back property Due Diligence
- Thread starter donksky
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Do the usual back ground check you would with any tenant but go a little further. If it is a money issue causing the sale do not rent to them. If they can not afford to pay there mortgage or have fallen behind in payments they are not likely to be on time with there rent checks.
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QUOTE (donksky @ Sep 1 2008, 09:42 PM) Has anyone done a purchase where the vendor rents the property they sold? Can u screen them first like any tenant (credit check, references) as a condition for purchase? what numbers do u crunch to know what`s behind the curtain? (why would they sell if rent might be higher than their mortgage? -- is it they have a high interest mortgage-but they could refinance if this was an issue right..., or how do u know if they have equity...too little, etc.? thanks
Hi Donna,
One of my clients just completed a deal where the seller is now the tenant within the same dwelling. There could be many possible reasons why this would happen. Perhaps the seller needs the money for some reasons and doesn`t mind renting for a year or so before looking for a new place to buy.
But you should definitely include in your offer of purchase and sale a condition to satisfy yourself with the seller/tenants credit application and a signed lease provided by you. Also, include in your offer the actual rent to be charged and the terms.
All the best!
Andrei
Hi Donna,
One of my clients just completed a deal where the seller is now the tenant within the same dwelling. There could be many possible reasons why this would happen. Perhaps the seller needs the money for some reasons and doesn`t mind renting for a year or so before looking for a new place to buy.
But you should definitely include in your offer of purchase and sale a condition to satisfy yourself with the seller/tenants credit application and a signed lease provided by you. Also, include in your offer the actual rent to be charged and the terms.
All the best!
Andrei