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Rental property question
Posted on 4/14/26 at 2:09 pm
Posted on 4/14/26 at 2:09 pm
I bought a rental house 8 years ago and my tenant just ask me to buy it
It’s paid off. What’s the best way to fine out what’s it’s actually worth
It’s paid off. What’s the best way to fine out what’s it’s actually worth
7
Posted on 4/14/26 at 2:14 pm to kjntgr
I'm no expert, but I'd start just by looking on Zillow to see what nearby properties are going for just to give you a very nonspecific ballpark estimate.
Posted on 4/14/26 at 2:37 pm to kjntgr
No realtor friends or friends of friends?
Posted on 4/14/26 at 2:45 pm to kjntgr
more than likely he's going to need an appraisal on it for the bank. Maybe you can go ahead and get an appraisal and tack it on to the sale price
Posted on 4/14/26 at 2:51 pm to kjntgr
Appraisal
Posted on 4/14/26 at 2:59 pm to kjntgr
If you want a decent estimate to contemplate this check zillow zestimate and other homes in the area that are similar what they sold for recently
If you need a more exact amount because you really think you want to do this, pay for an appraisal
If you need a more exact amount because you really think you want to do this, pay for an appraisal
Posted on 4/14/26 at 3:40 pm to kjntgr
Go to Darren James website and use his home price calculator. More accurate than Zillow
Posted on 4/14/26 at 4:06 pm to kjntgr
I have sold to my renter twice before. Awesome process. I would get an appraisal and or great idea of the market value. Seller finance and just need a lawyer to help with those docs for a few hundred bucks. Normally seller financing has a higher down payment and 1% over prime rate with a shorter length. If they ever fail to make a payment, legally, the property is yours all over again. They still make monthly payments but you can cut off the insurance and everything in your name. While you don't get all the money at once, you get more this way and cut out the realtor costs.
This post was edited on 4/14/26 at 4:07 pm
Posted on 4/14/26 at 8:25 pm to rpg37
I like this idea
So, he keeps paying me and I don’t have to pay INS OR property tax?
So, he keeps paying me and I don’t have to pay INS OR property tax?
Posted on 4/15/26 at 5:51 am to kjntgr
quote:
So, he keeps paying me and I don’t have to pay INS OR property tax?
Correct. No more maintenance. No more insurance. No more property taxes. You are the bank.
Also, the majority of your capital gains will be deferred because you will not get your money in a lump sum.
Also, because of the way mortgages are amortized, the borrower will barely pay down the principle over the short term of the loan. Note I always use 5 year balloons on these transactions.
Posted on 4/15/26 at 10:06 am to frogtown
Wow
U are a huge help
Could I get your email address for a few more questions
U are a huge help
Could I get your email address for a few more questions
Posted on 4/15/26 at 10:27 am to kjntgr
No man ask them here. This is good info.
Posted on 4/15/26 at 11:43 am to frogtown
So , after my tenant and myself have agreed on a purchase price, I need to hire a lawyer for the documents?
Does the tenant typically place a down payment ?
For example, my property is worth about 266k on ZILLOW
Would u give a discount based on the fact that I don’t have to hire an agent and the seller is already in place?
Then, let’s say he gives me 20k
Should I take the balance he owes me and divide that by the months in 5 years? (60)
I’m afraid that will be more than he can afford
That’s over 3,000 per month
Does the tenant typically place a down payment ?
For example, my property is worth about 266k on ZILLOW
Would u give a discount based on the fact that I don’t have to hire an agent and the seller is already in place?
Then, let’s say he gives me 20k
Should I take the balance he owes me and divide that by the months in 5 years? (60)
I’m afraid that will be more than he can afford
That’s over 3,000 per month
Posted on 4/15/26 at 11:59 am to kjntgr
I use this tool: LINK
Yes. You two work this out.
Maybe a small one. You should save about 7-8% off the top cost because you eliminated the agent fees, cleaning fees, and vacancy.
Normally seller finance is between 5-10 years. This all goes into what he can afford. You two stil have to negotiate.
quote:
Does the tenant typically place a down payment ?
Yes. You two work this out.
quote:
Would u give a discount based on the fact that I don’t have to hire an agent and the seller is already in place?
Maybe a small one. You should save about 7-8% off the top cost because you eliminated the agent fees, cleaning fees, and vacancy.
quote:
Should I take the balance he owes me and divide that by the months in 5 years? (60)
I’m afraid that will be more than he can afford
That’s over 3,000 per month
Normally seller finance is between 5-10 years. This all goes into what he can afford. You two stil have to negotiate.
Posted on 4/15/26 at 1:18 pm to kjntgr
quote:
Should I take the balance he owes me and divide that by the months in 5 years? (60)
I’m afraid that will be more than he can afford
That’s over 3,000 per month
No.
A 5-year balloon mortgage is a short-term loan featuring low, often interest-only or 30-year amortized monthly payments for five years, followed by a single, large "balloon" payment of the entire remaining principal balance. It is ideal for borrowers intending to sell or refinance within five years,
Example of my last owner finance transaction.
Borrower put down less than 5%. I financed him the balance which was $145K at 9% interest. Borrower is paying me $1167 month.
I want to get the balance of my funds within 5 years hence the 5 year balloon on the note.
If the borrower takes the entire 5 years before he refinances, the balance on the loan will still be about $140K. The majority of the payments he is giving me is interest. He will have barely paid down the principle.
This post was edited on 4/15/26 at 1:19 pm
Posted on 4/15/26 at 2:31 pm to frogtown
Balloon notes typically incentivize the buyer to refinance before the 60th month.
Usually, it isnt intended to pay for an entire house in 5 years.
It is easier to refinance a home than to go through the process of financing a purchase on one.
This process eases the burden off the buyer, provides good interest income and cash flow to the seller, and has a relatively short closed position within 60 months.
In some states, it is easier to foreclose than to evict a tenant. Although I am very far removed from this process. Someone else could chime in.
Usually, it isnt intended to pay for an entire house in 5 years.
It is easier to refinance a home than to go through the process of financing a purchase on one.
This process eases the burden off the buyer, provides good interest income and cash flow to the seller, and has a relatively short closed position within 60 months.
In some states, it is easier to foreclose than to evict a tenant. Although I am very far removed from this process. Someone else could chime in.
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