How to approach landlord about buying their rental?

Question

As tenants, I'm wondering what kind of offer we could present to our landlord to buy the house we are renting. Why would we want to do this, why would we even think that the landlord would be open to such an idea, and what are the obstacles? Here's the situation:

1. Landlord had to move to a different state to have better access to healthcare, i.e. did not move by choice per se. This health issue ultimately led to a close family member passing and now I don't believe they have any family living in our area anymore.

2. Still has lots of belongings (including a boat) in a large shed on the property... could imply intention to move back, or a desire to not have to deal with it and possible interest in having help getting rid of all this stuff

3. Have heard from a neighbor who is still in touch with the landlord that he is talking about buying a sailboat and sailing around the world... not sure if he is serious about this or not but suggests to me a desire to move on from current lifestyle.

4. Home last sold in 2007 for somewhere around $120k, currently could sell for upwards of $400k, so it's probably paid off or has very low interest rate. Would not cash flow, if we were to become landlords and rent it out, with a conventional loan for the current home price at our current lease rate ($2k/mo)

5. Lot is very large and could probably accommodate 1-2 more entire houses, or just some ADUs, which is the appeal to us. However this would obviously require substantial work and we probably wouldn't have the funds for years.

Since I think we'd be losing money to rent it out (if we were to move) at our current rate with a conventional loan, I'm imagining maybe some kind of seller finance situation... which gets back to my question, what kind of deal could we present to our landlord that they might find appealing and gets us the chance to at least break even on rent?

I realize this may be a fantastical scenario with no feasible solution but I thought it would be an interesting exercise. I appreciate insight from landlords, or folks who have done deals like this before.

Jake Andronico · Answer

@Nate McCarthy

Great way to get creative! Love the idea.

Try to approach it with THEIR needs in mind first, and find out why they may be interested in selling, even before mentioning anything about seller financing.

If they want to sell it and have emergency funds for medical bills, seller financing likely won't appeal to them.

But if they want easy income, it could definitely work!

Nate McCarthy · Answer

Jon, I like this approach. Getting pre-approved for a conventional loan before having a discussion about buying a house--what a concept! 😆 I think it would be wise not to bombard them with an offer to buy, but rather to put the thought in their mind that we are interested in buying something, and how convenient would it be to not have to find new tenants? Thank you for the rational and well-thought-out input!

Nate McCarthy · Answer

This is very practical advice and I agree with the sentiment about not going into a conversation presuming anything about where their headspace is at. Funny, I was hoping to equip myself with some ideas so I could propose some transaction options to them right off the bat--but I agree with you that that is probably not the right move. It seems premature and sort of tacky after hearing your thoughts on it. Thanks for the counsel!

Nate McCarthy · Answer

@Jake Andronico, thanks for the input--I agree that any deal I would propose would have to be compelling to the seller, hence this think tank!

As far as benefit to the seller goes, @Matthew Paul I think you are probably right on the money and regardless of whether they would have preferred to stay in this house rather than move, it is likely providing them some excellent cash flow; and I'd be hard-pressed to come up with a deal that serves both parties better than the current situation.

But I'll never know unless I ask!

Sherry McQuage · Answer

I think it's a good idea to contact the landlord and ask if they want to sell it to you, especially since you're already renting/living there.  Look at Homes.com or Realtor.com to get an idea what that type of property is selling for (look at the ones Pending or Under Contract)...or, look in the county's GIS system to see what similar properties sold for.

Once you have an idea what a fair market value would be, let the landlord (if they're interested in selling) mention their price.  Sometimes you get lucky.

You could even bring up the subject of seller financing (search online for ideas of how to structure a seller financed offer), and make sure a competent real estate attorney helps write the offer documents (if it gets that far).  Good luck!

Kevin Smith · Answer

In addition to checking into a conventional loan you can look into creative financing. If he is open to seller financing you can do a SubTo if there is still an existing mortgage, plus give him the down payment if you have one, then he can take payments on the remainder of the equity ( sometimes called a SubTail).

If he is interested in this then you can set it up through title and escrow.

The Pros for him are that: 1. He doesn't pay a realtor 3% to sell it for him, 2. He doesn't cut a big portion of capital gain taxes all at once to the IRS, 3. He still has residual income for awhile, 4. He is no longer responsible for insurance, maintenance, or dealing with the realities of renters.

Nate McCarthy · Answer

Sean, thank you for the detailed response! You make a lot of good points. I think the property does have great potential, and the biggest challenge is going to be financing. In the event my landlord is interested in selling, I was wondering if I could add value in the short term by, say, converting part of the garage and/or covered porch into a bathroom and maybe a bedroom (currently 3 bed 1 bath). I'd have to do some research on the local market to know if this would meaningfully increase the value and the appeal as a rental in the long-term. Maybe this could improve cashflow and affordability for us?

I appreciate you bringing up all these things to think about. In any case I of course need to actually talk to my landlord, but I'm feeling better about that conversation the more points that are brought up for consideration beforehand.

Sean Barnebey · Answer

This is a creative scenario with some real potential. Let’s break it down and explore how you might approach this idea, the challenges you could face, and ways to structure a deal that could work for both you and the landlord.

Why the Landlord Might Be Open to Selling

• They’ve moved out of state for health reasons and don’t have family nearby anymore, which might reduce their emotional attachment to the property.
• The idea of simplifying their life and pursuing something like sailing around the world suggests they could be open to letting go of the property if it helps them achieve their goals.
• With significant equity or potentially owning the property outright, selling could provide them with a substantial cash windfall to fund their future plans.

However, their belongings on the property could signal hesitation to let go or simply a logistical barrier they haven’t addressed yet. This could be an opportunity to add value by offering to help with clearing or relocating those items as part of any potential agreement.

Why This Could Be a Good Move for You

• You see long-term potential in the property, especially with the large lot and development possibilities (even if those are years down the line).
• As the current tenants, you have the advantage of a direct relationship with the landlord and familiarity with the property, reducing competition and risk.
• This could be a chance to lock in a property that you might otherwise lose if it hit the open market, especially in today’s competitive environment.

Challenges to Consider

• If the landlord is emotionally tied to the property or reliant on rental income, they may be reluctant to sell.
• Financing could be tricky, especially with today’s interest rates and the gap between the current rent and what a conventional loan might cost.
• The development potential you’re interested in is likely a long-term play, which means the property could be financially tight in the short term, especially if you’re only breaking even or slightly negative on cash flow.

Structuring a Potential Deal

To make this feasible, you’ll likely need to explore creative financing options that align with both your financial capacity and the landlord’s goals.

• Seller Financing: Propose a deal where the landlord acts as the lender, allowing you to make monthly payments directly to them. This could provide them with ongoing cash flow while making the property more affordable for you. You could negotiate terms such as a lower interest rate or interest-only payments for a set period to ease your upfront burden.
• Lease-Option Agreement: If the landlord isn’t ready to sell outright, consider proposing a lease-option where you continue renting for a set period with an agreed purchase price. This gives you time to save or secure financing while locking in the opportunity to buy.
• Deferred Payments for Belongings: If the belongings on the property are a sticking point, you could offer to assist with clearing or storing them as part of the deal. This could make the sale more appealing by solving a logistical challenge for the landlord.

Things to Keep in Mind

• Underwrite Conservatively: Make sure you account for all costs, including property taxes, maintenance, and potential repairs. The high HOA fee is already a factor, so ensure you’re comfortable with the overall carrying costs.
• Focus on the Land Value: Since the lot has development potential, you’re looking at this as a long-term investment. If you can secure favorable terms now, the future development opportunities could offset any initial cash flow challenges.
• Communicate Flexibility: Approach the landlord with an open mind and emphasize that you’re willing to work with them to find a mutually beneficial solution.

This isn’t a fantastical idea at all—it’s a creative opportunity that could work with the right approach. The key is to highlight how the arrangement could help the landlord achieve their goals while allowing you to secure a property you see long-term value in.

Joey Banasihan · Answer

Hey @Nate McCarthy! Sounds like a cool opportunity and it also sounds like a lot of folks have some good ideas/approaches. There isn't much I can add here except for the local expertise of the Boise area and our sister company property management team get these inquires often from tenants - so we have seen many ways how not to inquire about it and a few good ways haha. It always comes down to understanding the seller(s), building rapport, and then coming to a win-win solution - we do a lot of creative deals, on & off market and each is always unique.

I'll send you a DM, would be happy to help however we can!

Jonathan Bombaci · Answer

@Nate McCarthy

I think this could be a great opportunity if approached thoughtfully. It’s important to recognize that your landlord likely isn’t thinking about selling the property right now, especially given their personal circumstances. Your goal is to plant the idea in their mind and create a situation where selling to you feels like the easiest and most logical solution for them.

If you haven’t already, the first step is to get pre-approved for a mortgage so you know what you could afford if you were to purchase the property conventionally. This will give you clarity on the numbers and help you determine how to structure an offer that works for both sides. Once you have a good understanding of what you can afford, reach out to your landlord in a friendly and casual way. Let them know how much you enjoy living in the home and mention that you’re planning to buy your own property in 2025. Ask for their advice and maybe even something a little corny, like whether they’d be willing to write a letter of recommendation for your lender when the time comes. This gets them thinking about your eventual move and the stress they might face in finding a new tenant.

After some time has passed, you could share that you’ve started looking at other homes, but the options in your price range don’t compare to the property you’re living in. Let them know how much you value their property and ask if they’ve ever considered selling it. By this point, they will have already thought about what might happen if you leave, including the need to turn over the unit and find a new renter. This can create a subtle but effective pain point for the landlord—especially if they’re not excited about taking on those responsibilities. Selling to you could begin to feel like an appealing alternative to dealing with the hassle of re-renting the home.

If they’re open to selling, you can share what you’d be willing to pay based on your research and pre-approval. At this stage, you can also discuss creative financing options, like seller financing, that might help bridge the gap between what you can afford and what they’d like to get for the property. Emphasize how this arrangement could work to their benefit, offering steady income, avoiding a traditional sale process, and giving them the freedom to move forward with their plans such as buying that sailboat and sailing around the world.

If they ultimately decide they’re not interested in selling, you’re still in a great position to continue your search and buy your own property in the near future. Either way, starting this conversation could open up a unique opportunity and help you make the most of your situation. Good luck, and keep us updated on how it goes!

How to approach landlord about buying their rental?

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