Rent backs are common when buying or selling a home. The process will go much more smoothly if you plan ahead.
- Negotiate the terms of the rent back when you are negotiating the purchase contract.
It's best to be clear from the beginning. Everyone is happy and willing to compromise at the start of the deal. It avoids unpleasant surprises in the middle or the end of the deal.
- PITI stands for Principle, Interest, Taxes and Insurance.
Often a rent back price is based on this term. It's roughly the monthly mortgage divided in to 30 days. It's best to come up with a specific dollar amount rather than this vague term. You can use an online mortgage calculator to come up with a dollar amount.
- Understand the difference between a 30 day or less rent back and a rent back that is more than 30 days.
There is a big difference in California between a 30 day or less rent back and a rent back for more than 30 days. A rent aback for more than 30 days is a lease. It involves a lot more than the shorter rent back. If the renter doesn't move out for some reason, you will have to go through the eviction process. Keep this in mind for all rent backs, but especially distressed sales or with tenants.
- The terms of the rent back don't have to be broken down by PITI, it can be a set dollar amount as well.
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