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Thinking of buying a property in South San Jose Area. They want to close the deal in 1 month but the owner wants to stay in the house for the next 3months since the house they want to move into will only be ready by that time. What are my risks/options here? Anything particular to keep in mind while signing the seller rent back agreement for 3 months.
Thinking of buying a property in South San Jose Area. They want to close the deal in 1 month but the owner wants to stay in the house for the next 3months since the house they want to move into will only be ready by that time. What are my risks/options here? Anything particular to keep in mind while signing the seller rent back agreement for 3 months.
Keep in mind that the condition of the house you get after several month's rental may not be what you thought you were getting at closing.
At the pre-closing walkthrough, sellers are motivated to leave everything in decent shape so that the closing comes off without a hitch.
Moving out after renting? Not so much.
If the contract called for them leaving the curtains, the workbench in the garage, ... and they pack them up, at closing you can insist on a sum to cover the cost before closing. After a rental, you're likely talking small claims court.
Also, what if the house they are moving into isn't ready in three months? Are you willing to be a landlord for an extended period of time? How about evicting tenants? Are you up for that?
Unless you are buying this house to use as a rental, there seems to be no upside to letting it be a rental for several months before you are able to take possession.
Are you financing the house with a mortgage? I think that many mortgages will allow for 60 days for the seller to rent the property, but after that it's considered an investment property and the mortgage rate goes up.
I have had many clients do it without an issue. Just make sure there is a buyers residential lease, that outlines date of termination of lease, a high per day charge if not out by that day (typically 3 times the normal daily rent), that the rent pmt is either mkt value gor term of lease or mortgage pmt including taxes and ins, whichever is higher). And get a security deposit equal to one mo rent.
Do a walk thru before closing and another after its empty, before you return sec deposit.
Thinking of buying a property in South San Jose Area. They want to close the deal in 1 month but the owner wants to stay in the house for the next 3months since the house they want to move into will only be ready by that time. What are my risks/options here? Anything particular to keep in mind while signing the seller rent back agreement for 3 months.
It would be a shor5 term rental. You will need to treat it as such. You will get three months of your mortgagecpaid for by the tenant. I would double up and take that money and put it to principal and make three payments yourself for those three months
The risk is like any other rental. But I doubt the guy is gonna trashbit like a real tenant. He’s jus5 trying not yo move twice. When 8 bought my house that came up. The onl6 reason 8 didn’t do it was because the old owner wanted a 90 day escrow. Which I didn’t care about but she wanted three month rent back at no charge AND was about 40,000 over anyone else selling in the area.
She eventually sold 14 months later. By then the prices were up to where she was asking.
Been there, done that. Shouldn't have. The owners wanted a quick closing because they were trying to conceal that the fairly recent roof was failing. Then they wanted to rent back while they remodeled their retirement condo. After the closing, they forwarded us maintenance bills for things they had on contract. Like idiots, we paid them. Shortly after we finally moved in, it became obvious that the roof was failing. We could have sued them, but felt we'd still gotten it at a decent price, didn't want a lawsuit.
Go with a clean closing, no rent back. Keep it simple.
Thinking of buying a property in South San Jose Area. They want to close the deal in 1 month but the owner wants to stay in the house for the next 3months since the house they want to move into will only be ready by that time. What are my risks/options here? Anything particular to keep in mind while signing the seller rent back agreement for 3 months.
I think that the sellers won't have any difficulty getting a buyer to do a rent back. The market is heating back up again.
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