Lease back to sellers?

warontv · August 2011

We put an offer on a house, and the sellers are wanting to stay in the house 2 months after closing (they are building their next home). Has anyone done this, if not, what are your thoughts?

It actually works out well for us, because we are still in a lease. They are going to pay rent, in the form of cash @ closing & we will not have any "double payments". The house is a steal, & in immaculate condition, but I just feel uneasy about being a first time home buyer turn landlord..

TIA.

saisongbird · August 2011

It would make me nervous. Any damage done to the house by the sellers would be YOUR responsibility, unless you can put a provision in the lease that they are responsible for giving you the house in the condition it's on at closing. I would be nervous to do so.

warontv · August 2011

saisongbird:
It would make me nervous. Any damage done to the house by the sellers would be YOUR responsibility, unless you can put a provision in the lease that they are responsible for giving you the house in the condition it's on at closing. I would be nervous to do so.

Yes, that is in the lease. Plus, they are giving us a one year warranty.

Chloe77 · August 2011

Can you make settlement when they want to move out rather than 2 months early?

I don't have personal experience with this, but if it works out for you and for them, and if you have a lawyer review the contract and make sure it addresses your concerns, it's probably ok...

vanillacourage · August 2011

You need to check for implications on your home insurance. You will likely have to insure the house under your name at closing, then classify it as a rental for however long the sellers are there.

You'll want protection in case they cause routine damage to the place or aren't out by the deadline. I'd require them to give you a walkthrough at close so you can take pictures of the house, then of course another walkthrough when they are finally out. I'd ask for a security deposit that you can hold in case there are any damages.

Gannon · August 2011

It actually become very common in my area for a while. It can be set up so that it works out very well and you are well protected.

Your Realtor can help you set up a Lease After Sale (may be called something different in your area but same idea). The lease is just like any other lease. Once you close, the sellers become tenants and you are the landlords. Rent is owed and it is usually based on your PITI (principal interest taxes insurance). Obviously, rent can be negotiated. You also collect/hold a deposit. It is essential to have a written lease, just as you would renting to anyone. If it becomes necessary to evict your tenant, you want a lease in place to establish & define your terms and relationship.

Look at it this way, you buy the house and someone else pays for the first two months of your ownership Not all bad! LOL

It can work

warontv · August 2011

Gannon:
It actually become very common in my area for a while. It can be set up so that it works out very well and you are well protected.
Your Realtor can help you set up a Lease After Sale (may be called something different in your area but same idea). The lease is just like any other lease. Once you close, the sellers become tenants and you are the landlords. Rent is owed and it is usually based on your PITI (principal interest taxes insurance). Obviously, rent can be negotiated. You also collect/hold a deposit. It is essential to have a written lease, just as you would renting to anyone. If it becomes necessary to evict your tenant, you want a lease in place to establish & define your terms and relationship.
Look at it this way, you buy the house and someone else pays for the first two months of your ownership Not all bad! LOL
It can work

Thank you for the reassuring words Gannon. My REA tells me we are very well protected,, but I'm the type that always assumes the worst. It is an amazing deal, they are paying closing & we essentially pocket their rent.

Who knew you could make money buying a house!?

Shell24 · August 2011

Ours was only a week, but our sellers rented back from us. We weren't worried about it in our situation. They were the original owners and, maybe we were naive for trusting them, but it worked out fine.

Sisugal · August 2011

We did a rent back from our seller and also we rented from our buyer. Money was placed in escrow and then given at end of the rental period.

seujoanne · August 2011

I did a lease back to the seller when I purchased my first house. It worked out exceedingly well and I had no issues.

biblionerd · August 2011

It's extremely common in my area.

glittergal73 · August 2011

We rented our house back from our buyers for 3 months. We signed an agreement that any damage would be our responsibility and they got to do an extra walk through before we left to inspect. You pretty much get to decide what stupulations you want since the home would be yours. If you think the people are good then it can work.

Lease back to sellers?

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