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My landlord's guardian recently offered us the option to purchase our home. I was given good information here (thanks, Branwynn) that an owner financing arrangment typically involves a five-year arrangement, after which time I must obtain my own financing. I spoke with a banker this weekend and he gave me some more great information. My landlord fully owns the house, and they would like me to continue to make the same payment I am making for rent now, except that it will go toward purchase and interest, and I would take over insurance and taxes. The banker said basically they are looking for a guaranteed rate of return over five years. Since the house is currently strictly income (other than expenses of insurance, taxes, and any repairs) for my landlord, and I would be taking over the expense part of that, I am thinking that I could offer the landlord the equivalent of five years' rent payments, at little to no interest (market interest around 4%), as the full purchase price of the house. Based on the current condition of the house and recent sales in my neighborhood, this would be a fair price for the house, which needs among various cosmetic updates, a complete reno of one bathroom, flooring throughout, a new garage door, a new roof, new kitchen cupboards. A neighbor advised to have the foundation repair warranty transferred at no cost to me. The banker advised that there is a potential that if anything happened to my landlord, the property could be considered part of the estate and have to be sold - there is a good chance of my landlord dying due to health problems she has had for years. If that were the case, I could lose the house, the money paid in, and any money I put in in updates to the property. I want to - obviously - avoid that scenario. They want to sell me the house - they will probably get more from me than selling through other means, and also have alot more hassle and spending money to get it sellable. I have paid rent on time every month for seven years, and taken care of the property above and beyond a normal renter (including having the house weatherized under a government grant program, replacing doors, and tearing down and having removed a rusted shed on the property that was infested with bugs. Any and all advice on some kind of legal arrangement that might not be the usual, other things to consider, what I might be missing in my thinking, etc., appreciated!Answer Question
Answer by tasches at 2:35 PM on May. 2, 2012