Buy Rental Investment with Current Owner as Renter?

[TeCKis300]

So I’m currently in the market looking for a rental investment property. There’s a property that I’m considering, where the current owner, wants to become a longer term tenant. So a bit different from a traditional rent-back situation.

This tells me that the current owner is distressed and can use the money. And is either concerned about having a place to live, or likes the existing condo.

I would only accept this is the seller would accept a slightly lower than market offer, along with rent at market value.

Thoughts about the risk of this situation, in buying the property? What protections should I have in place for such an agreement?

[FlyerInHi]

You should meet the seller/future tenant face to face to discuss their motivations. Take them to lunch

[thejq]

I don’t think it’s any different from “buying from one and renting to another”. However if the seller wants to include the lease as part of the conditions, because of bad credit or debt, you need to be very careful. You could end up with a deadbeat and have to evict later. You should still qualify him/her no different from any other applicant (credit report, income etc.). The amount of price concession should be based on the risk you have to take in case the qualification was bad.

[TeCKis300]

The concern is that it’s not quite equivalent to a new renter in terms of certain tenant rights. I can’t qualify them as I would with a credit check and such, or can I, and during escrow? The psychology of the renter is different too in terms of entitlement. Just want to make sure I have the right terms and agreements in place which is part of the advice I’m looking for.

The owner/seller has listed the property, but has not been accommodating for viewing. Seems like they are in a distressed sell situation for cash.

[Author]

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