The Washington Post reported recently that Barack and Michelle Obama bought the house they had been renting.
That was serendipitous for me because I’ve been working for a crazy number of months on an online course called, “Buying the House You Rent.”
Nice timing, Barack! Thank you!
One of the authors of the original story gave me a call and the result was I got a nice quote in this story in The Washington Post.
The Obama Home Buying Story is Not Uncommon
The Obamas’ landlord and future home seller was Joe Lockhart, a former press secretary for Bill Clinton.
Despite the $8.1 million sale price, the story of the Lockharts renting to, and then selling to, the Obamas has a lot in common with the typical landlord-to-renter sale.
The Lockharts lived in the home but when Joe took a new job in New York City they had to figure out what to do with the house.
These are decisions most homeowners who change jobs have to make regardless of the price of their homes.
“Should we sell our current home when we move or should we rent it out and keep it as an investment property?”
Plan. It’s not uncommon for homeowners who want to see what it’s like to be a landlord to keep their former residences as rentals when they move on to their next homes.
Reality. Many of these one-house landlords will find out they don’t really like being landlords after all and within a few years, they’ll sell their one rental property.
Good News. If you’re renting from a one-house landlord, that’s good news for you. One-house landlords, like the Lockharts, are probably more open to the idea of selling to you than a full-time or corporate landlord would be.
Bad News. Of course, at any given moment most landlords are NOT willing to sell to their renters or anyone else so you need a bit of luck to have a landlord who is willing to consider selling the place to you.
No Agent Involved
Another thing in the Lockhart-to-Obama sale that is common in landlord-to-renter sales is that it appears no real estate agent was involved.
When a landlord has already found a potential buyer – the renter – the landlord may not want to pay any real estate agent commissions.
Sometimes – and it’s almost certainly true in this case – the landlord and tenant are on friendly terms.
The landlord and tenant might discuss some major points between themselves and then hire a real estate attorney(s) or real estate agent(s) to help them put it all together.
Buying the house you rent is not common but it’s not uncommon either.
I estimate that 5% of home buyers who were previously renting single-family homes or condos before they bought their homes, actually ended up buying the single-family homes or condos they had been renting.
Of course, most renters do not want to buy the homes they’re renting. If you DO want to buy the home you’re renting, your odds of success are a LOT higher than 5%.
I expect that some of the 3+ million owner-occupied homes that were converted into rentals after the Great Real Estate Bubble burst will be converted back to owner-occupied homes over the next 10 years. It hasn’t started yet but landlord-to-renter sales will likely be increasing.
Whether it’s a luxury home being bought by a former president or a starter home being bought by a young couple, buying the house you rent can be an excellent option for both you and your landlord.
If your landlord will play ball and you can afford it, it’s very doable.
- If your landlord just approached you about selling the place to you and you want to get up to speed fast, check out my full online video tutorial course.
- More stories on the Obamas buying their rental home here, here and here.
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