I bought my first property that I wanted to rehab and sell, but I had no luck, so it became a rental three months ago. I just went to collect this month’s rent and the house was empty! Compounding the issue is the fact that my wife and I have to move in February so I’d like to find an exit strategy for this property that will allow me to recoup all (or most) of my money. I don’t care about a profit as much now as just breaking even. I made some mistakes during this project, one of which was paying too much for the house, the other doing too much to the house. So, I owe the bank 150k and have 12k in other debt from the rehab. However, the property will only appraise for around 140-145k. The monthly note on the house is 1,100.00. Can anyone give me some ideas on how to make a graceful exit?
Your best option as this time is to set it up as a Rent To Own. You’ll have a tenant/buyer, rather than a tenant. And you’ll avoid a repeat of what just happened.
Can you give me an example of how that works? How would you set that up?
The tenant/buyer signs a lease and an “option to purchase” agreement. The option agreement spells out how long they have to purchase the home. The money they give you to move in will be for a security deposit (refundable) and an option payment (non-refundable). If they buy, the option payment gets applied toward the purchase. If they don’t buy, you keep the option payment and keep on collecting rent.