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We are buying a home and finally after our 5th offer on different short sales, on this last home the seller accepted it. I know it could take weeks or months for the bank to approve it or reject it, but I am thinking ahead. We want to rent the home until we move there (3 years). The seller had mentioned to the listing agent that they want to stay and rent it. The problem is that they stopped making payments on their loan some time ago. With us living out of state, I dont know if this would be such a good idea to have them rent from us. If they couldn't make payments before, how will they make rent payments. I don't know what their mortgage payment was before, but I am assuming rent will be less. I know we will need to get a property management company to handle this. I just wondered if anyone has had experience with this, do you think its a good or bad idea?
You answered your own question. They haven't been making payments, what will make them make payments now? I can't imagine the rent would be considerably less. You still want your taxes and insurance along with the mortgage covered, right? It's going to be pretty darn close to their payments.
If they were that irresponsible, they'll probably continue to be until and unless they can find a place with considerbly less rent in order for them to comfortably afford their payments.
The upside, since they've been living there, they know the condition and might not ask you for any repairs of anything, but yet, if they couldn't afford their payments, they probably couldn't afford the upkeep either, so you might be getting into a big 'ol bag of worms.
chickrae, I'm going to say "it depends". What is the reason for the default from the seller? Did someone get laid off? Did someone have a medical problem? IF there a story behind the situation, and can show you that they have resolved the problem and can make the payments you have (their payments were probably much higher) they may be as good as any other rental risk. And if you have a good relationship with them, maybe better. I would want to see their credit history and see if this was just a blip (bad things happen to good people) or is it typical of them.
Other thing that may go into your consideration, how have they taken care of the property even going into a short sale? Do they have kids that are imbedded in the school and community? Try to find out a few more personal things and then you can make a more informed decision. the current owners just may be a great option for you.
....you could also consider taking a sizable deposit, say 2 - 3 months worth. Might not be terribly realistic, but at least you'd have a couple of months socked away if there was an eviction. Good luck.
Location: Georgia, on the Florida line, right above Tallahassee
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Quote:
Originally Posted by FalconheadWest
You answered your own question. They haven't been making payments, what will make them make payments now? I can't imagine the rent would be considerably less. You still want your taxes and insurance along with the mortgage covered, right? It's going to be pretty darn close to their payments.
If they were that irresponsible, they'll probably continue to be until and unless they can find a place with considerbly less rent in order for them to comfortably afford their payments.
The upside, since they've been living there, they know the condition and might not ask you for any repairs of anything, but yet, if they couldn't afford their payments, they probably couldn't afford the upkeep either, so you might be getting into a big 'ol bag of worms.
I'd run from that offer like a lizard on fire. No, no, no, a million times no.
I would tell them you already have a tenant lined up. That tenant might be the Easter Bunny, Santa Claus or Elvis, but you don't have to disclose who you will be renting to.
You answered your own question. They haven't been making payments, what will make them make payments now? I can't imagine the rent would be considerably less. You still want your taxes and insurance along with the mortgage covered, right? It's going to be pretty darn close to their payments.
.
The is only 3 years old and they are the original owners. I know they paid alot more for the home three years ago (the bubble period) and we are getting it for about 90,000 under. We are putting over well over half down, so our payment will be abou $700 with taxes and insurance. We are told rent there for that size of home is 1,100-1,300 a month. I am thinking their payment would of been alot higher, but you are right I don't know for sure.
I'd run from that offer like a lizard on fire. No, no, no, a million times no.
I would tell them you already have a tenant lined up. That tenant might be the Easter Bunny, Santa Claus or Elvis, but you don't have to disclose who you will be renting to.
What about if I went through a property management company and they paid deposit, first, last month rent etc. I guess I feel sorta bad they are losing their home.
chickrae, I'm going to say "it depends". What is the reason for the default from the seller? Did someone get laid off? Did someone have a medical problem? IF there a story behind the situation, and can show you that they have resolved the problem and can make the payments you have (their payments were probably much higher) they may be as good as any other rental risk. And if you have a good relationship with them, maybe better. I would want to see their credit history and see if this was just a blip (bad things happen to good people) or is it typical of them.
Other thing that may go into your consideration, how have they taken care of the property even going into a short sale? Do they have kids that are imbedded in the school and community? Try to find out a few more personal things and then you can make a more informed decision. the current owners just may be a great option for you.
Good Luck
They have taken very good care of the property. I don't know that much about them. They didn't try to counter the offer, but maybe in a short sale the seller doesn't...not sure we never have gotten this far before on the other deals.
Location: Georgia, on the Florida line, right above Tallahassee
10,471 posts, read 15,773,507 times
Reputation: 6435
If your property management company is any good, they will run a credit check on them.
Which will probably be extremely lousy. They will most likely inform you of this and they most likely will not recommend that you have a tenant with lousy credit, who has chosen not to pay their home loan for months.
Screw it, what have you got to lose? The property management company can just change the locks & boot 'em when/if they don't pay rent.
But...wait. Let's put me in their place. I love my new house! WAHOO!!...wait...can't pay the mortgage....argh....must short sell! Hey, maybe I can rent my home from the person that bought it. And I won't have to worry about upkeep, because he will! I can just pour my cooking oil down the sink and let the dandelions go wild and woopy do.
Once they short sale it to you, this house with amazing possibilities and potential will be like living in a home where someone died. Something did die there...their dreams.
On second thought, I'd refuse it to spare them the emotional pain. Refuse to give them more pain.
I know I could live there (A home is just a thing to me.) but it would drive my wife completely bat**** crazy. She gets emotionally involved with things, you see. Me? I'm a brick.
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