“The Homeowners Association has adopted a no-rent policy”: Our landlord wants us to buy or leave — what should we do?

Dear MarketWatch,

My husband is 62 and I am 61. He is medically disabled after several heart attacks, a stroke and triple bypass surgery. He has a monthly long-term disability of $ 3,300 that will expire at age 65 and a Social Security disability of $ 2,300.

I am still employed full time and earn $ 50,000 per year. We moved to Wichita, Kansas at the end of 2017 to take a higher paying position for me following the buyout of my business. We started out by renting a house here because we didn’t know where to live in our new town yet. We really like the neighborhood we are renting in and now want to stay in this part of town.

We are in deep trouble. The Homeowners Association has adopted a no-rental house policy, which will come into effect in January 2022. It is also on this date that our lease expires. Our landlord wants to sell his house and he wants us to buy it. We would like to stay, as we love the area and certainly don’t want to move again, but I am concerned about buying a house. Here are my concerns:

  • Our age

  • My husband’s health and whether I would be able to afford the house without his income.

  • Our ability to pay for the house after its LTD is interrupted.

  • Do we want to stay in Wichita, Kansas?

  • After living in this house for over 3 years, we know what needs to be fixed in the house, and can we afford it?

Please indicate what you think of our options. Is there anything we are missing in all of this? Thanks for your advices !

Truly,

Happy in Wichita

“The Big Move” is a MarketWatch column that examines the ins and outs of real estate, from finding a new home to applying for a mortgage.

Have a question about buying or selling a home? Do you want to know where your next move should be? Email Jacob Passy at [email protected]

Dear happy,

What a stressful situation this must be for you and your husband. Deciding whether or not to buy a home is already a huge choice, and I can only imagine how much more difficult it is with time running out. The good news is that whatever decision you end up making, you are given advance warning and can prepare yourself, mentally and financially.

You are right to approach this offer with caution and skepticism. It seems like you have two separate concerns: Should you buy a house? And if so, should you buy this residence?

Regarding that last question: your landlord probably needs you more than you need him or her. If you agreed to buy from him, he wouldn’t have to worry about hiring an agent to list the house. He could save money on repairs that he would likely need to make to bring it into perfect salable condition. And because there would be no occupancy gap, he would not face a loss of rental income from the vacant home.

“Your landlord probably needs you more than you need him or her. “

There might be benefits to buying the home you are renting, although some depend on your landlord’s motivation. You have the scoop inside this house. You know how good the shower water pressure is and where there is a squeaky floor. You have good relations with the neighbors in the neighborhood. These are all the little details that a home buyer usually doesn’t have available when making an offer.

Additionally, when a tenant buys direct from the landlord, there may be other opportunities to save money, and not just by eliminating moving costs. You already have a well-established relationship with him, which could facilitate negotiations. If he’s genuinely interested in getting out quickly, he may be motivated to lower the price if you ask or share some of the costs typically associated with buying a home.

Homeowners could get the upper hand in a sale

Of course, there can be downsides to buying the house you are renting. You will limit yourself. Sure, you love your neighborhood, but how do you say there isn’t a better home for you out there?

Your landlord could also force you to enter into a deal without the advice of a real estate agent or lawyer. I would recommend hiring one anyway – a real estate agent’s fee would likely come from the money your landlord would earn by selling the house, which could reduce what they do with the deal. Having an agent and a lawyer to represent you will mean that there are professionals out there who protect your interests and make sure you get the best deal possible.

Likewise, your landlord might ask you to forgo the home inspection. While you are familiar with the house and its potential flaws, I guess neither you nor your husband are skilled contractors. A home inspector might find problems you wouldn’t notice.

Approach pre-retirement home buying with caution

As for your other overriding question, you’ll need to do some soul searching and some math to determine if buying a home is right for you. You and your husband are fast approaching retirement. You say you love your neighborhood and don’t want to relocate, but you also wonder if you want to stay in Wichita. If you think you’ll want to move somewhere else in retirement, buying a home probably wouldn’t make financial sense.

Let’s say you are of the opinion that you are going to stay in Wichita. From a financial standpoint, you are only a few years away from living on a fixed income. The cost of your monthly mortgage payments would be fixed if you buy, but other costs will vary such as insurance and property tax maintenance.

For starters, take a look at what you pay in rent: is it manageable? Then get an estimate of what your monthly mortgage payment would be.

If you’re already concerned about the cost of your current rent and the mortgage payment is higher, you should delay the purchase. Moving is always painful, but it can be bad, depending on your finances.


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