With so little inventory on the Real Estate Market, you may be considering buying your rental home from your landlord. Sometimes this can be an amazing opportunity to avoid the hassles of our current Market and sometimes it can be a mistake. Here are some tips to help you make a good decision and protect yourselves from problems down the road.
AM I GETTING A GOOD DEAL?
There is No Such Thing as a Screaming Deal.
Chances are, your landlord is looking to sell because Real Estate Market is giving them the opportunity to make great profit on an investment. Certainly no one can blame them for that, but you also can’t expect your landlord to sell their property for less than what the market would bear just because you have been a great tenant. Quality properties are selling with multiple, above asking offers. Why would a seller risk that opportunity? You might not get a killer deal, but hiring a good Realtor can help make sure you aren’t over-paying for your rental home.
Factor in Your Moving Costs.
You might not get a screaming deal, but you also don’t have to move your belongings, unpack, relocate children to new school districts, or meet the new neighbors. There is something to be said for no interruption to your routine and not having to pay for a moving truck to move your stuff across town.
What Kind of Deferred Maintenance is on the Property?
You’ve been living in your rental home. You know about the sink that drips or the light switch that connects to nothing. These aren’t your landlord’s problem anymore, they’re yours. You have to pay to fix it or do it yourself. All resale homes have their problems though, and that’s part of home-ownership. Sometimes the devil you know is better than the devil you don’t.
Bring in Professionals, Especially when Buying Your Rental Home.
Your landlord might be trying to save some money by selling you the rental house directly, but that shouldn’t mean you have to suffer. Hire a good title company, good inspectors, and make sure that you are legally protected from any future problems with the property. Hire an Appraiser to make sure the value of the home is there (if you are securing financing, your loan will require an appraisal anyway). Hiring a Realtor to represent you in the transaction is well worth it. We manage the negotiation, make sure the sellers disclose properly and legally, organize inspections, coordinate with lenders, and arrange title to make sure your investment is secure. Shortcuts rarely work out in everyone’s favor.
CAN WE GET A LOAN ON THE PROPERTY?
Yes.
You absolutely can get a loan (providing you qualify) to purchase your rental home. FHA and VA lenders don’t lend on certain properties based on the year of construction and other factors. Consult with a lender and your Realtor for those stipulations before you get too far down the road.
Your Loan is Your Business.
Don’t tell your landlord what you are approved for without finding out what their listing price on the rental is. Simple, but you can tip your hand innocently in normal conversation. It happens all the time. Instead of telling your landlord what you can afford, ask what they plan to list their rental home for and then see if you can get pre-approved for that amount. Remember that if your landlord has the right to change his or her asking price at any time. Just because you have been on good terms as landlord/tenant doesn’t mean you need to overshare what you can afford.
Choose the Right Lender.
Find someone who is going to be in your corner the entire time. Most delays in the escrow process are loan delays; it’s important that you have a trusted lender to help you with the process. Go to their offices. Meet them. See how they conduct business. Response time when you tell them you need a loan will be a good indicator as to how quick they will reply when the process gets rolling. We are in a time of the essence business.
WHAT IF SOMETHING IS HIDING?
Nevada Law Requires Sellers to Disclose.
The Seller’s Real Property Disclosure is a required form for any seller selling improved real property. Period. If your landlord doesn’t present you that form upon receipt of an accepted offer have your Realtor follow up. That form requires sellers to disclose any problems that they are aware of with the property. Your Realtor’s Broker might have other disclosure forms too. These are all designed to protect you from problems down the road. Know the tools, use the tools.
Experienced People Know What to Look For.
You may buy or sell one or two homes in a lifetime. An experienced Realtor may do two or more transactions a week. There is no replacement for that kind of experience and knowing what to look for and what items might signal to bigger problems. Hiring a full-time agent to help you buy your rental home means you have someone who is looking out for your best interests.
