This article is a guest post submitted to our site by Sky Five Properties.
Most people go into the process of renting a home with an idea that they’ll move out eventually, either to rent somewhere else or to purchase their own home. Some people simply adapt to their rental, quirks and all, and dream for the day when they move to something that really makes sense for their budget, family and lifestyle. However, some people get lucky enough to find a rental home that checks all of the boxes, and they could imagine living there indefinitely. For those lucky people, when the option to buy the house they’re renting is presented, they pounce on the opportunity. The idea that the money you’re shelling out each month is now turning into your equity instead of filling the pockets of your landlord can be an exciting realization as well. If the stars have aligned for you and you’re seriously considering buying the house you’re currently renting, this is what you’ve got to do:
Know The Market- The first thing you need to do before presenting your landlord with an official offer is complete a CMA, or comparative market analysis. You want to find out how much your home is worth compared to other homes in the area, so you can present a fair and competitive bid that makes sense for you and the landlord
Get Pre-Approved– Just because you may have a closer relationship to your landlord than you would with a random seller, the process to fund and purchase the home are the same. When you know how much you qualify for, you can approach your landlord with facts and figures to back up your proposal. As with any home buying process, there are many questions you should ask yourself before making the commitment. For instance, how long does it take to buy a house? From start to finish, the process takes an average of 3 months, but that can vary depending on your specific situation. Once you qualify for your loan, you can start to do research and get educated on the home buying process so you can approach your landlord with confidence.
Have The Conversation- Find a time to talk to your landlord about buying the home. When they come over to fix a leaky roof or right after you’ve told them the AC is broken is probably not the best time. When things are good and rent is paid, approach them with your pre-approval letter and see if they are willing to sell. If so, you can move forward. If they are hesitant, a little negotiation may be in order. Never make the first offer, always try to elicit a price range from the landlord first. If you approach them with a price, you’ll never know of they would have accepted something lower. You can say something like “I’d like to buy this home, how much would you sell it to me for?” During negotiation, request to have your security deposit applied to your down payment, remind the landlord that if he/she sells to you, he/she can avoid hiring a real estate agent and that alone can saves thousands of dollars, and mention you are happy to buy the home “as-is,” which means the landlord won’t have to put any extra time or money into the home. If they are dead set on keeping the home, you’ll just have to keep renting or move out and find another place.
Consider Rent-To-Own- if the timing isn’t right, (for either you or the landlord, or both) to buy the home, then a rent-to-own agreement may be a smart compromise. This type of deal can be tricky, risky and detailed, and it’s important to be very educated on the pros and cons of this kind of agreement. Hire a real estate agent that can work as the middleman and ensure both you and the landlord are being treated fairly, and that the deal works in everyone’s best interest.
There are many benefits in buying the home you’re currently renting, including not having anyone to compete with. One of the best things about buying the house you’re renting is that at the end of the process you go home to your “new” home and don’t have to hire movers, pack everything into boxes, and spend a lot of time, money and effort relocation.
The bad news? You won’t draw attention from the neighbors as a big moving van pulls in, and you probably wont get “Welcome to the neighborhood” cookies from them either. But you’ll officially be a homeowner in a house that you love, that fits your lifestyle, and that you’re comfortable with. And that’s (almost) better than cookies anyway.