Should You Buy The House You're Renting: Yes or No?

Yesterday another person asked me this question... "Should I buy the house I am renting? It needs work, but the landlord wants to sell, and I don't want to move..."

Probably not, and here's why:

Assuming that you didn't just move in, your landlord has been living somewhere else for a long time. You (or previous tenants) have been paying for his house all this time, and one day it will be completely paid for. You are welcome!

So, do you think your landlord really wants to sell this house? Why should he? You are paying it off for him.

The house needs work. Hmmmmm. Who pays for that? Do you pay after you buy the house, or does he pay before you buy? I think you will get stuck with it. If he fixes it first, why does he need to sell to you? And usually the seller does not have money to fix up... they want to sell to raise money. If it needs much work at all, your lender will require it be fixed prior to closing and the seller getting paid. Make sense?

This seller usually won't be willing to give you a good price, either. In most cases you will be better off finding another house that is in nice shape, vacant, owned by a "motivated" seller who is flexible.

What makes a seller motivated?

1. they bought a new house, must sell the old house
2. need to raise money
3. moving
4. other financial, family, or emotional issues

Will this owner finance you? Will the owner credit some or all of your rent to the purchase price? Will he sell on a land contract or give you an option to buy? Will he pay your closing costs or moving expenses?

Your landlord usually will not be that flexible. Consider a seller who will owner finance. So, the answer is, "Don't buy the house you live in... unless it is clearly in your best interest." Usually it isn't. Keep looking for a better deal.

Best regards,

Ken Chipman

PS If you do want to work with this seller directly, or another flexible seller, see our page on how to buy a house without cash or credit.