Selling House to current Tenant
Hey BiggerPockets,
Here is my scenario:
I have a tenant that wants to purchase my home with a current lease agreement as follows:
- Lease will terminate on 7/31/2106
- Tenant can terminate lease without penalty via a 90 days notice (essentially is locked into staying until 7/31/2016 if does not give notice by 4/31/2016
- Current payment is quarterly payment $6250 due 4/13 and will prorate from 7/13-7/31 (if necessary) for $1170.
My PITI is $2075 (it was a close to a printing press before I refinanced last year).
Ideally, we close as soon as possible, as I am ready to start full on to my next project. The numbers for both parties are mutually beneficial for getting this deal done. I am basically breaking even minus any major maintenance and repairs, which are fairly unlikely. The tenants new PITI is in a range of (2000-2170) based on a 30k final price spread ($370,000-$400,000) and 3.75%-4.00% 30 year loan. The property will transfer as-is, meaning I am not going to spruce it and use money for an open market listing. Further, to rent a similar house he is looking at minimum $2500. Tenant has resided in property for more than 4 years.
What type of discount/incentive should I give up to my tenant? On an open market the property is worth and should sell relatively fast for ~$385,000-$400,000 via recent comps and current market conditions, and 18 month old refi appraisal $375,000.
With the above information what would you sell the property for?
The purchase agreement will get prepared by a very intelligent seasoned real estate attorney. To make sure every is kosher, what are some key elements the contract will need to make everything in my favor?
Should I allow the tenant to do an inspection? Obviously, I don't want him to do it in case anything major pops up, but highly unlikely. The house rates at C+/B- quality and A/A+ location.
Tenant is pre approved for loan above $400,000.
Any other thoughts/questions about the above scenario?