Occupied Foreclosure - Do I offer previous owner option to rent?

[Jorge Almonte]

I just purchased an occupied foreclosure (I thought it was vacant). When I met the current occupant it was the previous homeowner who was kind enough to show me around so I could examine the property and explained her original intent was to wait for eviction.

I offered her cash for keys and she asked if staying in the property was an option shes willing to pay market rent. She explained the foreclosure came about after a divorce but as she’s finally been awarded child support she can afford the rent.

Reluctant to offer this option I insisted cash for keys is the best option. Now I’m wondering if I missed an opportunity to simply have a ready tenant. Who has done well in keeping up the property.

The property was to be BRRR'ed and needs little work after examination.

So the question is do I offer the occupant an application for tenancy and assuming she meets the standard let her engage in a lease agreement? If so, do I avoid rehabbing the property?

ARV: 230,000

Purchase: 145,000

Rehab: 20,000 (has not been completed)

Balance owed: 128,000