Want to sell and stay for 4+ years

[Chris Antonelli]

Own a home in desirable country club community outside of Washington DC.  Want to sell and stay for at least 4 years until kids in college.  Reason:  Want to access equity for new business but credit not good so selling and finding a rental not a good option.  Proposal 1:  Sell well below market value and stay either rent free or very low rent while continuing to be responsible for all repairs and upkeep.  Proposal 2:  Sell at market value and prepay 4 years of rent from the proceeds, standard lease terms. Thoughts?

[Chris Seveney]

Quote from @Chris Antonelli:

Own a home in desirable country club community outside of Washington DC.  Want to sell and stay for at least 4 years until kids in college.  Reason:  Want to access equity for new business but credit not good so selling and finding a rental not a good option.  Proposal 1:  Sell well below market value and stay either rent free or very low rent while continuing to be responsible for all repairs and upkeep.  Proposal 2:  Sell at market value and prepay 4 years of rent from the proceeds, standard lease terms. Thoughts?

Having a renter responsible on a residence for all repairs and upkeep can lead to legal problems down the line. The standard sell it and rent it back for 4 years is probably the best bet. The challenge will be selling it at market value as a rental because the numbers will not work. 

For example lets say its $800k property that rents for $3,000. Lets say investor puts 20% down and finances 640k. They are paying $5,000/mo assuming taxes insurance and mortgage. They are losing $2,000 month which is $96k over 4 years and that does not include repairs or PM fees etc. Time value of money they could invest that $160k somewhere else and earn $50k+ on it over that period vs losing $96k. I would assume minimal appreciation during the next 4 years so for an investor (like myself) I would probably only offer a number of around $600k. 

Now if you were willing to pay rent equal to mortgage, taxes and insurance for the buyer then that could change the numbers.