Can you help me with a deal?

[Ricardo R.]

Hi everyone... I'm in the middle of a deal over the next week and wanted some input from you guys:

I'm purchasing a single family home (SFR) for buy and hold - to rent out. I have all the numbers crunched and it's a great investment. Here's the issue: the Sellers are having difficulty finding a home but want to sell, so they are asking if they can sell but stay for 6 months and pay PITI (principle, interest, taxes and insurance) at which point I can raise it by $100 every month until it flattens at $1,400 for 6 more months. I need to be at $1,550/mo on rent to meet my NOI/ROI. What are your thoughts?

Essentially they are asking to pay all costs of my new mortgage payment for 6 months (so really no cost to me) and then rent from me for 6 more months at $1,400/mo after which point they will sign a lease for the rent amount I choose or move out. 

How do you guys see this? a good deal to make the sale go through or should I counter? and if so what other options can I give them?

Any input would be appreciated.

Alex

[Jennifer Beadles]

@Ricardo R. If you agree to let the sellers stay, you are missing out on monthly cash flow, plus what if something breaks down while they're living there, and since you are not getting cash flow you'd be going negative by fixing whatever needed to be fixed. It doesn't sound like a fair deal for you. 

If it were me, I'd offer to let them stay for 6 months paying whatever fair market rent would be, along with a security deposit of course, and if they find a home sooner you could write in the lease that you would let them out early. This way it would be a win for you, and a win for them.