When landlords want to sell their condos, they usually approach their tenants first to see if they're interested. However, just because your landlord hasn't said anything about selling the home doesn't mean he or she wouldn't be interested in an offer to buy. Here are two tips for convincing your landlord to sell you the condo you're renting.
Highlight the Benefits
In general, the reason your landlord is renting out the condo is so he or she can have a steady source of income as well as take advantage of the tax benefits associated with owning property. Therefore, you would need to provide the person with some compelling reasons to sell if he or she seems reluctant or uninterested in doing so.
One thing that can work in your favor is market conditions. If there's more inventory in the area than people willing to rent, your landlord may have difficulty finding another tenant to replace you and may not be able to command the same rate you're currently paying. Unless the landlord already paid off the mortgage, each month the home sits empty is a month he or she is losing money. Therefore, the landlord may be willing to sell rather than deal with the trouble and expense of locating a new tenant.
Another benefit you can point out is that you're a guaranteed buyer. If the landlord wants to sell at a later date, he or she will have to hope the market is favorable to him or her at that time. If there are many condominiums for sale at that time, it may be hard to find a buyer. The home may sit on the market for months waiting on a buyer, and there's no guarantee the future market price will be the same or better than what it is currently.
According to the experts, people tend to prefer avoiding losing something than gaining an equivalent value, so the landlord may decide to cash in on the opportunity now rather than risk suffering a reduction in the market value of the home in the future.
Discuss a Rent to Own Option
An alternative is to discuss a rent-to-own option. In this scenario, a portion of the rent you pay would go into escrow and be applied to your down payment when it comes time to buy the home. Although the landlord may not be willing to sell right now, circumstances may change in the future that may change his or her mind. Having this little nest egg practically guarantees you'll get first dibs when that happens.
It's critical you have a contract drawn up stipulating the terms of the agreement and what will happen to the deposit money if either of you back out of the deal. Additionally, you'll need to work hard to maintain your income level and credit score. The last thing you want is for the opportunity to buy to appear and not be able to do so because you can't get a home loan.
For more information about this issue, contact a real estate agent.
