I'm an accidental landlord and just found out I lost homestead exemption. I'm also having to pay a shortage because I technically lost it for last year as well. My mortgage payment was once $1120/month with my tenants paying $1250 in rent. Now my mortgage is $1288 for the next 12 months, so I'm operating at a loss. I don't have much savings to put into a serious maintenance issue, but I do carry American Homeshield.
My tenants signed a lease purchase contract in February of 2016 that was set to close on January 15th, 2017. They've agreed to purchase the house at $172900. I currently owe $158500 on the mortgage.
In January, they told me that they still had a credit judgment that was preventing them from securing a loan for the house but were still interested. I extended the contract through March, and now they're being really vague about their ability to purchase it by then while still expressing interest in buying it.
Maybe you can help me understand if their dilemma is truly solvable:
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Foreclosure in 2011
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Two credit cards sent to collections in 2006 and 2007 ($2600 and $1900 balance each). Each account was closed by credit grantor and their credit report says "Bad debt; placed for collection; skip"
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One pubic record judgment filed in 2013 for a credit card with a balance of $4100.
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No inquiries in last 120 days.
His credit score is currently 643, which is high enough for an FHA loan. However, he tells me the loan agency said it's only the 2013 credit judgment preventing him from securing the loan, and he's trying to get it removed.
I have ~$5000 of their money that I'll keep if they don't buy the house, but they can use it towards their down payment upon completion of the sale. Last I checked, they had about $3500 in their own savings to complete the down payment. I assume and hope they have more at this point.
Would the one credit judgment really be preventing him from securing the loan?
Here's what I'm thinking:
Since they've never been late and keep the house in great shape, I should give them another year with a few caveats. Their rent will be raised by $100 to help with additional cash flow. The area has seen a rise in average home prices, so I'll raise the asking price to $175900.
OR I can tell them sayonara, get a realtor, sell the house on the market, and hope and pray I'd close at $172900, which I don't believe will happen. My tenants buy the house? I make about $14k on the sale before taxes. I sell with a realtor? $9k before taxes if I'm lucky.
And that's if it sells. I could end up kicking out tenants that have been great renters and having to sign new people that may be awful.
tl;dr - I'm currently operating at a loss with my rental property. Great tenants have credit judgment preventing them from buying house. History includes multiple collections and a foreclosure. Credit score is 643. Enough money there for down payment. Should I extend their lease to ensure I get the most money on the sale of the house, or should I kick them out, try to sell at a lesser profit with a realtor, or find myself stuck with new but bad tenants?
Submitted March 04, 2017 at 08:14AM by NoPatNoDontSitonThat http://ift.tt/2lpABUd
