Dumping Home. Some questions.

[you&me]

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Just throwing this out there. If your tenant is interested you could maybe do a private deal with them. Check with someone to make sure this is legal and this is a weird thought.

1) If you are targeting $230k you would be about $11,445 with real estate fees and your net after the mortgage penalty would be $217,265
2) If the tenants are interested but can't afford the down payment. Maybe reverse the numbers and say sell it to them for $243k and "gift" them 5% down at the time of closing (this part I'm not 100% sure how it would be structured or legality of it as it's kind of zero down/cash back mortgage in cmhc's eyes potentially - maybe a mortgage broker can answer you better on this or even a realtor might have seen this happen) and you would net $229,560 after the mortgage penalty. So win win for both potentially...

Of course you can structure the numbers however you want. But I went with a number that's kind of in your favor and is still lower than the other units prices.

I don't know for sure, but that sounds an awful lot like the sort of deals some mortgage-bros were promoting back in the pre-'08 days... I believe some of those mortgage-bros ended up in jail for mortgage fraud...

Edit - I see Ercchry beat me to the punch... Legit question - what's the difference between the above scenario as a legitimate VTB and mortgage fraud where values are inflated to cover a down payment (or lack thereof)? Profit?

[ercchry]

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I don't know for sure, but that sounds an awful lot like the sort of deals some mortgage-bros were promoting back in the pre-'08 days... I believe some of those mortgage-bros ended up in jail for mortgage fraud...

Yeah you can’t gift as a non-direct family member but vendor take back is still sound... $0 down is still offered by builders but good luck finding a lender

[s2k_boi]

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If only one already suggested this...

oops missed your comment about vendor take back.


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I don't know for sure, but that sounds an awful lot like the sort of deals some mortgage-bros were promoting back in the pre-'08 days... I believe some of those mortgage-bros ended up in jail for mortgage fraud...

Edit - I see Ercchry beat me to the punch... Legit question - what's the difference between the above scenario as a legitimate VTB and mortgage fraud where values are inflated to cover a down payment (or lack thereof)? Profit?

I get it that it's on the grey side so that's is why I said check with people about the legality on this. But no clue (not my area of expertise) but I think they inflated the values. But this deal would be at market value or under market value as the other units are listed at $260k and assuming they sell for $245k?

[gwill]

I chatted with one of my real estate lawyers to ask the best way to help my tenants buy one of my rentals if I was gifting them the money. He said one of the better ways to do this was to say the rent they paid was the deposit to buy.

In regards to your tenants I've never had to gift a tenants $5000 when selling any of my rentals. In some cases the tenants helped sell the place while other times I wanted the tenants out.

Have you been in the place to see how your tenants live? It's better for your carrying costs if their in there while it sells. You could incentivize them to stay with reduced rent as long as the place looks good for showings.

Or figure out an incentive for them like free rent for 45 days once an offer is firm on the place. Most reasonable tenants would jump on this.