Cut a break

I don't know for sure yet but we may have cut a break. The Big house, I had asked if the owner might rent it to us until the bank closed. It is a huge risk for both parties, renting a potential foreclosure and having to move again if the bank turns us down and forecloses on the owner. It could happen. We are a good $50,000 below neighborhood value on our offering price. Though pretty close to the asking price. The owner owes on her first and also has a second which won't see anything in the end. But we would have had to move again anyway if we moved into a rental.

Her incentive is she would get paid rent she would otherwise never receive. She has walked on her house. Its a free windfall for her. It is a strange new world to ask permission to move into and rent an abandoned house that we are trying to buy.

When we found out the owner would consider renting to us I was thrilled. It keeps our incentive to buy her house alive. Otherwise I would continue looking. Tom has a couple leads on other houses we were going to follow. Nothing like drinking buddies to know the secrets of the city.

Once Tom knew she would rent he wanted to have the rent as low as possible. After all she was getting a free windfall and keeping the deal alive. The windfall is her only incentive though as she no longer cares about the house. We are negotiating price. I originally figured $1300 to $1500 a month, but Tom, after I made the offer, said that was way too high for all the risks we would be taking. Insurance on the house is probably lapsed. We could get renters insurance, but if it flooded or a tree fell on it, there is probably no insurance to do those kinds of big repairs and since we don't have ownership we couldn't spend that kind of money. It would also kill our wanting to purchase ithe house. We could still have our deal rejected by the banks and then where would we be.

Tom googled some legal sights to make sure the arm's length transaction of the sale of the house would not be compromised. He felt we were on safe ground. Renting early did not impact the sale in that regard. I was afraid to pay the bank as they would then have incentive not to close. The owner takes the risk that the bank may decide to come after her for any rent money to offset the debt. She might have to resubmit her financials and the payoff changes, slowing down our transaction. Which is why paying up front and having it go three months buys time if the bank does decide to renegotiate.

So I suggested $2000 for a three month lease on the house, paid up front. If the house closes early it makes no difference. We would want access now to get everything fixed and running, but the contract would expire at the end of September. She gets a $2000 summer windfall and we get into the house early. I am waiting for a response. I would do an extension on the house sales contract to expire at the end of September, so both the lease and the sale would be renewed at the same time, if needed . That would put us six months out in our contract. Hopefully the bank will be done and settled and we will own our house by then.

I wish Tom had been speaking to me the other night and opening my e mails, which he admitted to ignoring. He thought I was venting at him in my e-mails, but I was trying to get stuff done. I was the one who suggested the higher rent, trying to give the owner incentive to let us in early. Not realizing the reasoning of her receiving nothing if she didn't agree, so the amount did not have to be that generous.

Tom's philosophy was we would walk away entirely potentially, so she should accommodate us. But there is no incentive to that reasoning either as the owner has already played her cards with the bank. She could care less other than having this nightmare behind her all that much sooner. He is right though in that it is cash she would not have at all if she turns us down.

Which is why My compromise suggestion of $2000 for three months should make everyone happy. We could close in a week, and that amount would be more than she would get renting month to month to us. She can't rent to anyone else without compromising our deal. No one would want the house since it is under contract and they would get evicted at the end. Its a win win with lots of risk, a real gamble. My heart is pounding.

PS We did not get the giant Bordello. The other party was willing to do a one year lease and we couldn't.

"Positive Vibes, Baby, Positive Vibes"