house sale then rent back (Pflugerville, Howe: sales, 2015, leasing)

[rangergrit]

RE Agents: is a "sale and rent back" contract feasible when the seller has no financial concerns? In researching about this, it is usually for someone wanting to stay until their new house is available. But, what if the seller just wants to cash out the equity of his house, and wants to rent for an extended period? And willing to prepay all the rent. And willing to give up the appreciation in value. Other options, like HELOC, HELoans, and reverse mortgages are not desired. Are investors out there willing to buy such a house?

[10scoachrick]

I would think an investor who intended to put the house up for rent anyway would go for such a deal...why not? Of course, they couldn't be getting any "homeowner" benefits such as the homestead exemption, more favorable interest rates, etc. We sold our place and 'rented' it for a month from the new owner...I don't see a lot of difference if we had stayed "long term".

[Austin97]

one issue is if you are getting a mortgage, to get the best rates it needs to be your primary residence. Insurance for rentals is also different.

Anything is possible, but you would need an investor (or someone willing to lie on their mortgage) if you plan to stay and rent for an extended period.

[mhudson78641]

I sold my house in Pflugerville in early 2015. I have a cash buyer that was in investor and part of the sales agreement was to allow me to rent my house back while my new house was being built. Worked out well for us. Stage thing was going to a closing and then going back to my house. I also has to pay a deposit which seemed silly but I ended up gettting it all back and sold my fridge when I moved out.

[tom331]

There is time limit for leasing back option. The leasing back agreement allows the seller to lease back the property no more than three months and all the rent must be paid upfront. The seller need to use a standard leasing agreement for a lease term which is longer than three months.

[RoamingTX]

Originally Posted by tom331

There is time limit for leasing back option. The leasing back agreement allows the seller to lease back the property no more than three months and all the rent must be paid upfront. The seller need to use a standard leasing agreement for a lease term which is longer than three months.

Not necessarily. If I walk in and buy his house cash, I can do whatever I want in terms of leasing, etc.

[TeamLynn]

There are investors who want to do this.
I am seeing one tomorrow looking to do this.

However on the seller side, I very rarely have seen a seller who wants to pay market rent for their home.
That's probably what the investor wants.

So what I often see is seller has been in the house 10-20 years, making super low payments...and now rent is 2-3x what their mortgage is.

So typical investor is looking for something like 1% rent of the purchase price...so if you have $200,000 house they want ideally $2000/month rent.

[10scoachrick]

Originally Posted by TeamLynn

There are investors who want to do this.
I am seeing one tomorrow looking to do this.

However on the seller side, I very rarely have seen a seller who wants to pay market rent for their home.
That's probably what the investor wants.

So what I often see is seller has been in the house 10-20 years, making super low payments...and now rent is 2-3x what their mortgage is.

So typical investor is looking for something like 1% rent of the purchase price...so if you have $200,000 house they want ideally $2000/month rent.

Not quite that bad around here, thank goodness!

Not to mention finding a $200k house!!!