Posted by Brian M. Powers(MI) on February 20, 2002 at 18:35:08:
brian:
I am aware how Bi-Monthly mortgage payments work.
I’m not talking about a mortgage…I’m talking Lease Options, particularly to those folks who may have structured an actual L/O this way.
Thanks…>BMP
Bi-Monthly Lease Option Payments - Posted by Brian M. Powers(MI)
Posted by Brian M. Powers(MI) on February 20, 2002 at 17:57:06:
Here is a first for me in my young investing career:
I have a guy who wants one of my places by buying on a L/O. He has passed screening.
He has made a request I have never heard before. He is requesting Bi-Monthly payments instead of once a month. His reasoniing is he really wants to qualify to buy the place and feels it will create a better payment history to a lender if he pays bi-monthly.
It makes sense to me and I like the fact that it shows he is serious about buying since my big payday in the deal comes when I have a T/B cash out and buy the place.
Any thoughts?
Thanks!
BMP
Re: Bi-Monthly Lease Option Payments - Posted by William CA
Posted by William CA on February 22, 2002 at 16:58:27:
‘Bi’ the way - bi-monthly is once every two months. Semi-monthly would be twice a month. Make sure you specify the correct one in any contract!
Re: Bi-Monthly Lease Option Payments - Posted by Jim FL
Posted by Jim FL on February 20, 2002 at 23:08:17:
Brian,
I agree with Johnboy, but would like to add a little twist.
Why not tell the guy that you are fine collecting bi-weekly rent payments, but this will cause you to change a few things in your accounting, which will cost a small fee.
Raise the rent by this amount, perhaps $25 or so.
Then take your rent amount, divide it by four, and charge him that per week.
Since there are actually 4.3 weeks per month, you will make out better in the long run.
Also, be sure to set the schedule in writing, and make them stick to it.
Explain that it all MUST be done according to schedule, and should the Tenant miss one weekly payment, the rent is considered not paid.
Perhaps talk to a local legal mind about the legality.
As I read your post, this thought came to my mind;
"What if the T/B’er pays the first week, misses the next two, and shows up with just the last weeks rent?"
Does this constitute unpaid rent for the entire month?
Would this hinder an eviction because you accepted “Partial rent” for the month?
I know in some states, if a tenant pays you a portion of the rent, you accept it, and an eviction is filed, you might have to re-file the eviction.
Some other states do allow (Illinois) a landlord to accept partial rent, and still proceed with eviction until the entire month is paid up in full.
Check your local laws and be sure what ever you agree on will work there and comply.
Just my rambling thoughts,
Jim FL
Re: Bi-Monthly Lease Option Payments - Posted by JohnBoy
Posted by JohnBoy on February 20, 2002 at 22:54:59:
I don’t know if that is his real reasoning behind this or if he’s really wanting it set up this way because it would be easier for him to make the rent payments. Either way it doesn’t matter. You can structure the rent payments to be made any way you both agree on.
I knew of one landlord that rented out his houses and collected by the week. He actually made more income that way because he based the rents on a weekly basis. He would show up once a week on the tenant’s pay day to collect the weeks rent before they had a chance to go out a spend their money on other things. His tenants liked it because they didn’t have to budget by putting money away every week so they had all the rent by the 1st of the month. The landlord was happy because he was getting paid every week and making more money renting by the week. It’s OK if you don’t mind having to be around every week to collect your rents!
You could set it up monthly as always and he could just pay bi-monthly if he wants. As long as he keeps all his cancelled checks to show documented proof of his payment history then he shouldn’t have any problems with the lender when he’s ready to get financing. But whatever way he starts out with he needs to continue paying that way to show a consistant payment pattern and history to the lender. Don’t pay bi-monthly one month and then monthly the next.
Me, I wouldn’t care how they paid as long as I’m getting paid all my rent by the 1st of the month the rent is due. If they want to pay me half the month’s rent two weeks early every month then that would be OK by me! 
What are all you people talking about??? - Posted by JamesL
Posted by JamesL on February 20, 2002 at 20:04:07:
Bi-weekly or bi-monthly??? 2 totally different plans. Brian, how did your prospective T/B explain the benefits??
Re: Bi-Monthly Lease Option Payments - Posted by Travis (Dallas)
Posted by Travis (Dallas) on February 20, 2002 at 19:54:08:
Sounds like a win-win situation to me. I’d take the money in any form he wants to give it to you, if it is paid in advance.
If he owes you $800 on March 1, and he pays $200/wk in February so the total is received in full by March 1, I’d be very happy.
If he is paid weekly, this would help his budget which would probably make sure you are paid on time.
I would also check into automatic electronic deposits from his bank to your bank.
Just my opinion.
Travis
Bronchick,John boy answer this one!!! - Posted by RR
Posted by RR on February 20, 2002 at 19:46:52:
nt
Re: Bi-Monthly Lease Option Payments - Posted by tang-0-rang
Posted by tang-0-rang on February 20, 2002 at 19:40:52:
I have never heard of this. does the fact that some months have more weeks in them, be cause for concern. He then would be in fact adding more to his option money on some months…ya think. not a bad idea as the buyer…maybe it would be a good idea to try in the future for a sandwich lease option.
JMO
Todd Williamson (CO)
Re: Bi-Monthly Lease Option Payments - Posted by brian
Posted by brian on February 20, 2002 at 18:10:47:
people often pay bi-weekly because it increases their equity, if you pay once a month you make 12 full payments a year. if you pay bi-weekly you make 12 full payments a year plus one all principal payment.
go to yahoo and search (bi-weekly mortgages) they’ll explain it in better detail.
what i am talking about is… - Posted by Brian M. Powers(MI)
Posted by Brian M. Powers(MI) on February 20, 2002 at 21:35:35:
What I am talking about is what I posted in my original post. My prospective T/B asked if I would consider Bi-Monthly lease payments.
This other brian jumped in about searching yahoo for bi-weekly mortgage payments…not sure why.
BMP