Hello, I had an agent send me some possible investment properties which includes a SFH (nice Class B neighborhood) with a tenant (family member of the seller) already in place.

The video appears to show a well kept home and the rent sounds reasonably good but the sale includes a Deed Restriction (haven't seen the wording) where the agent explained says the tenant (now 67 years old) will stay until she passes or moves (out to a nursing home I suppose). There is also an agreed to annual increase in the rent of 3%.

I'm thinking my investment in purchasing the house is tied up, potentially for a very long time and therefore the price of the house should be substantially discounted.

Anyone with experience with this type of scenario?

Nuttins all good and nuttins all bad.

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I have bought a place before from the seller who did a lease back after her husband died. She wanted to pre pay two years of rent and live up here for six months to avoid the Florida heat/humidity. Though this wasn't in the deed, when the woman died about four years later (and was still living at the home part time), the state came back to me and claimed that the woman had a life estate in the place. I tried to explain that She was selling as she didn't know how to keep the place up.

The state wanted me to pay them 15% of the moneys that I collected in rent from place. It took me over four months to get the matter resolved, and I had to disclose my trust agreement showing that the lady wasn't involved in the trust at all. It still cost me about $2,200 in legal fees.

So I would advise you check the inheritance laws in your state. I know I was surprised in such a crazy interpretation. Now would I do it again, yes - but I would factor that 15% tax in to my offer. I swear in Pa our number one export is senior citizens down to nicer weather.

I wouldn't be interested until the price was an unbelievable deal. That tenant could live there for a another 30 years or more.

What happens if the tent stops paying rent. You have conflicting contracts. One that says the tenant has a legal right to stay there until death and another weaker contract that says the tenant is supposed to pay you rent.

What happens if the tenant becomes incompetent to care for then home and refuses to move?

During another time when it was a sellers market, finding "investment income property" was like finding a needle in a hay stack. So my friends were looking to invest in units. They found a 4-plex with a similar deed restriction. The owners, in their early 90's lived in the master 3 bedroom unit and wanted to die there and not have to move out.

So my friends got the building for $550,000, instead of the market price of $600,000. So they paid $50,000 under market, only a 8% discount (not that much). But they got the x-owners, now tenants, to pay market rent. They only wanted to pay $1,500 per month. But a 3 bedroom units were going for over $2,000 a month. And that was their rent--$2,000 a month with a $50 increase every year.