Is This Legal?
I think I may have come up with a win-win situation for myself and my tenants. Please let me know your thoughts and if my idea is even legal.
My husband and I are wanting to move to GA. We have two rentals plus our own home to sell (the rentals would be in a 1031).
My idea to save myself the nearly 6K I'd have to pay a realtor in commission ANYWAY for the sale of our home was to offer my tenants a short-term loan of two years for the 6K they would need as a down payment on my property. Or 5K to purchase one of the rentals, which are valued at 65K and 55K.
I would have to have an attorney put together the legals to it, as I DO want that cash back. My other self-protection thought was NOT to tell them we are moving out of state, but have the payments sent to a local P.O. Box (I have to contact the post office, never had a P.O. Box before). If not there, my parents have a Florida address and we can just get the money from them.
This way I get my money back over time, and they get a home that they may not have managed to save the money for in a few years. I looked up the payments they would have through a bank, plus the property taxes and the home insurance, and they would still be paying less in mortgage than they would in rent, even if they bought our home.
I would NEVER have considered this for any of our previous tenants, but our current folks are pure gold. Nice, honest, hardworking people - my husband and I both feel they deserve the "leg up" into home ownership.
All of this is theoretical - I know it depends upon our tenant's deciding if they want to buy or prefer to rent, or if their credit is good enough that they can qualify for a loan (one tenant has no credit - they are in their 60s and have paid by cash or check their entire lives).
Any advice/counsel for or against is welcome. Thanks!
sounds like a lease option arrangement. That is legit.
Lady,
Sounds like a good deal for the both of you. Another option is to add the 5k to the purchase price and get it on the other end...
Good Luck
One other thought, make sure they use a lender that will allow the down payment to come from a source other then themselves....
Thanks.
My dad didn't like the idea, and I respect his opinion. His fear was that the tenant could just walk off with the money. But that's what the contract is for - to prevent that possibility and leave me legal recourse - just in case.