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    6xy5126's Avatar
    6xy5126 Posts: 3, Reputation: 1
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    #1

    Dec 25, 2007, 12:30 PM
    Owner to act as lender to tenant/renter
    I own a rental in Reno. My tenant offers to buy my house. I only owe $80k to BOA and can pay-off. Can I offer mortgage loan to my tenant like a bank?

    How will I go with this transaction if even possible? Will the mortgage payments consider my rental income?
    Choux's Avatar
    Choux Posts: 3,047, Reputation: 376
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    #2

    Dec 25, 2007, 01:38 PM
    You can sell this house "on contract" to another party. The other party gets the income tax write-off on his taxes.

    You would need the help of a lawyer to draw up the papers. There are potential dangers for those concerned, it is not usually recommended.
    Dr D's Avatar
    Dr D Posts: 698, Reputation: 127
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    #3

    Dec 25, 2007, 02:08 PM
    Yes you can be the provider of financing just like a bank. The two options are a note secured by a Deed of Trust (Nevada is a D of T state), or a Contract for Deed. The rate, down payment, sales price are all negotiable between you and the buyer. It would be advisable to enlist the services of a good real estate attorney to make sure all bases are covered. Keep in mind that you have the potential of carrying this debt for 30 years. Should you have a pressing need for those funds in the future, the only way for you to cash out would be to sell the debt to an investor at possibly a deep discount. The yearly income received from this debt would not be rental income, but interest income.
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
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    #4

    Dec 25, 2007, 05:07 PM
    Yes, you can have mortgage paperwork written up and basically your are the bank and also the seller. You will have the issues selling the home, and also have to report their interest to the IRS and supply them records of the interest paid. The interest is additional income outside that of the sell of the house and fall under full taxes not any exeptions the sell or the home may have fallen under. In this case the deed is actually transferd, you have to have them funish you proof of insurance, check that they pay their taxes each year and so on.

    Others sell it under a contract for deed.
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