Any Landlords with experience selling to your long term tenants?

Question

Hi all!

I'm new here but my fiance recommended with forum for some advice. I own a rental property in Lake Arrowhead area (since 2022) that I initially had as a STR, but have had long term tenants in since last year. I'll be honest -- I purchased this with inheritance when my parents passed as an investment when the competition was high and went in $50k over asking and had to put $145k down with my self employed loan. I refinanced last January which lowered by rate to 5.9% but my loan amount went up to $311k (previously $278k). Now that I'm thinking about selling it seems impossible to ever make that money back, as most comparables are trending at most $395k. My tenants are great and are interested in buying it eventually, in which case I would do FSBO (hiring a lawyer) but cannot afford the $400k I quoted them (with me still taking a loss). Does anyone have experience with FSBO or Rent-to-Own to tenants? Any advice? Do I just list it and take the loss?

I'm 33 and my fiance and I are looking to move to Asheville in the near future so I'm hoping to off-load this property in the next year.

Thanks in advance for any help!

Jon A. · Answer

This would mean that you are acting as the bank for your buyers/tenants. I would require a larger down payment than the bank would require as you are not in the business of being the lender. You are also taking a large risk that the tenant will perform according to the contract. If they don't perform, then you have to foreclose on them which could be a real struggle trying to get an unhappy homeowner out of a house. If you think a tenant is difficult to remove I cannot imagine what it would be like to remove someone who thinks they own the home and has repainted and remodeled, gotten a few pets, etc.

I would tread very lightly and consider your other options. If you can FSBO to them, you can FSBO to anyone. But why would you? What do you stand to gain by doing that? You would do better on the tax side of things and you would have a refundable deposit. I think it is a very slippery slope.

Mitch Davidson · Answer

@Jenny Westerhoff. Sorry to hear that the numbers aren't looking so good for you on this deal. Perhaps rates will continue to cool this year so that you can have increased competition in the Spring/Summer. On another note, that's awesome that you want to move here to Asheville. I'm happy to help you connect to people, resources, ideas, etc.

Any Landlords with experience selling to your long term tenants?

2 Replies