Sellers want to lease the property after I close on it?

[Zazenski Garrison]

I'm closing on a occupied SFR rental on the 19th of Dec. The sellers were seeking to close on another house but their deal fell through. Now the sellers are asking me to lease the home to them after closing for 1 month so they have time to close on another house. I was planning to do a light rehab and rent it out for 1300/month. My agent suggested that I could collect a $1000 deposit and charge them $1800/month after screening them. What would you do in this situation?

[Charlie MacPherson]

@Zazenski Garrison  This can go very wrong - and I've seen it happen.  The problems arise when the seller/tenants don't move out on time, leave the place a mess and/or cause damage.

If you decide to let them stay, you need a formal "Use & Occupancy" agreement.  Have an attorney draw it up.

Charge whatever the market rent is for one month if you like - or maybe slightly more.  But on the day after the rental term ends, there should be a radical escalation of that rent unless you agree to an extension in advance.  If they stay beyond move-out day, you should make it hurt.

Do a hold back of funds at closing and be sure it's a sufficient amount to pay for a contested eviction with some extra for cleaning and damages. Be sure that your agreement with them allows you to use those hold back funds to evict, clean and repair.

It's a tough situation and you probably want to be the nice guy.  Go ahead and do so, but be sure you mitigate your risks at the same time.

Good luck!