Renting until you can flip?
Looked at several props today. A few of them would have "flip" potential but carrying the load until they resale may be tough. Unfortunately, there would be a bit of rehab involved and they are HUD foreclosures. That being said...I need to bid quickly if I want them. Problem...not sure how long I may sit on them since I can't line up a buyer prior to bidding.
Question: There is no doubt that I can rent them quickly but the end result would be basically breaking even on the mortgage payments each month. Is there any way that I can legally put a clause into the rental contract stating that if I sell the house, they may or may not be able to stay as renters (depending on the buyer)?? If the answer is that it may vary state to state...then who would I call to get the answer to my question? My local housing authority? I just want to make sure that I speak to the correct individual since I've received misinformation in the past from a person or govt entity that didn't really have any business answering my question in the first place.
I really need to flip a few initially to gain some capital for other types of investments. Otherwise, I would go the rental route. Decisions, Decisions....
Any advice??[ Edited by woodchuk on Date 01/19/2003 ]
Just rent on a month-to-month basis. At the same time your renter signs the lease agreement, have the renter sign a disclosure that the property is for sale, and that the renter understands that the new owner may not continue to renew the lease. When the property is bought subject to the existing lease, the new owner only has to deal with a month-to-month tenant. Your local landlord/tenant laws dictate the amount of lead time required to give the tenant notice of lease termination.
You may have to give a serious rent discount here, because I suspect very few renters will pay market rent, pay to move in for a month or two, then pay to move again.[ Edited by DaveT on Date 01/19/2003 ]
DaveT, I think you hit the spot there!
Month for month rentals would work, but you're also correct in saying that not many people will rent if they know that they will have to be out in a month or two's time.
One must just make sure that it is legal fro a lesee to sign a contract wich states that he/she must move out when you sell the place. It is possible that one can not sign away a part of general law which could state thet rentals have first rights (on accomodation) on the property after a sale of the property.
That is to protect the lesee.
Just check it out.