Lender · Tampa, FL · Member since 2013 · 228 posts · 95 votes
I want to offer on a property that I've found but the owner has said that she will take offers that allow her to stay in the property for another month or two into greater consideration than offers that don't.
She's a sick elderly woman and she has a judgement for 60k pending foreclosure sale in November. She is asking 130k but I think she may take as low as 115k or 120k. Her realtor told me that she is looking with her to find a place to move into.
The ARV on this property if I just clean it up (10-15k) is about 185k and if I rehab it (40-45k) it's about 220k. My question is should I buy this property and allow the owner to stay for a couple months, and if so how can I protect myself in the offer/contract? Could I have the title company hold 10k and give it to her once she moves out and if she doesn't within 2 months it would be refunded back to me?
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
11y
You can get an attorney to draw up a 2 months rental agreement. Definitely get a deposit from her and make sure it is enough to ensure she will comply with all the terms of the agreement. Warning: if you do any rental under 6 months and one day in the state you much charge tax. If you fail to, the state will allow you to pay it anyways..out of your pocket! Having a seller stay after closing is not a rare occurance just make sure you cover your bases.
Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
11y
If you do allow her to stay you might to do it through the winter time. You also should hold a large proceed so she leaves and an established rent amount. I would also go way below market for this deal so you being paid for this deal.
Lender · Tampa, FL · Member since 2013 · 228 posts · 95 votes
11y
@Elizabeth Colegrove I would love to go way below on this deal, but my area is super competitive right now and that house is in a great neighborhood. I'm sure she will get multiple offers, but I'm hoping mine will be more attractive by allowing her to stay. It just hit the MLS today and I'm going to offer tomorrow.
I've heard of having to let people stay during the winter time in some northern areas but our winters here in FL last about 2 weeks.. lol. Our coldest day is sometimes in the 30's and thats in the middle of the night. Its actually still in the 80's here!
Rental Property Investor · Oldsmar, FL · Member since 2014 · 238 posts · 61 votes
11y
I have never heard of any issue like you are speaking of. If the owner occupied needs to stay in the property after the property is sold then just do a month to month rent. I do understand that most banks want to have a clean bill when drawing up the papers for owner occupied loan. I thought that a 90 day grace period is common.
I would do it under the table. Tell the lender that you will give them 30 days to move out and have a pro-rated rent setup for the lender for records. Then do a month to month rent with the person. If you don't have rentals then find you a simple lease agreement to make due for the short term.
Lender · Tampa, FL · Member since 2013 · 228 posts · 95 votes
11y
@Brian Johnson I'm not getting bank financing for this property. My concern is that if I allow her to stay, then pay her and she decides not to move out what would my next step be? I'm assuming eviction. If I had to do that and it took an extra couple of months that would cost me some money in interest as well as court fees. She doesn't seem like that type of person, but things happen and I would feel like a terrible person if I had to put her out.
Real Estate Investor · Memphis, TN · Member since 2014 · 156 posts · 101 votes
11y
@Daniel Paloscio, I would definitely protect yourself. Remember, the house is set to be foreclosed on, so make sure you do indeed have a large enough deposit to cover the rent, if that is the way you choose to structure it. History shows that she does not fulfill her financial obligations.
I think I would offer a much lower price for the house and give her basically "free rent" or "move out within 60 days." That would make things much cleaner than a typical rent situation and you would not have to pay taxes.
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
11y
Have you considered letting that person stay at an agreed-upon rental amount then you giving the woman money for move-out? That would be an incentive for her not to stay more than a couple months? Example: Offer $2,000 when she delivers the place to you with all her stuff out. Meanwhile, whatever you offer her on the sale of the house, make it $2,000 less. (Or whatever is agreeable to her.)
Have you considered letting that person stay at an agreed-upon rental amount then you giving the woman money for move-out? That would be an incentive for her not to stay more than a couple months? Example: Offer $2,000 when she delivers the place to you with all her stuff out. Meanwhile, whatever you offer her on the sale of the house, make it $2,000 less. (Or whatever is agreeable to her.)
That sounds like a . good idea if you want to play it safe. Just think of it as a rental once the paperwork is done. The key is to make sure you get the property at a price you feel good about making the deal work.
"If you are NOT embarrassed about you offer than you ask to much"
The Texas Real Estate Commission (TREC) actually has a standard form for a lease back to the seller. Florida probably has something similar, but you can check out the Texas version here...