Posted by Brent_IL on April 17, 2002 at 06:29:04:
No, that means you need a fair amount of money before you can safely keep and hold or stay in the middle of a no-money-down deal.
House is Rundown Now What? - Posted by Dino
Posted by Dino on April 16, 2002 at 20:47:09:
Hypothetical:
After leasing a house from a seller with an option to buy, leasing it out to a buyer, then getting the house back in a warn out condition (the buyer stopped paying), where do I get the money to tidy up the house (paint, carpet, garden) without losing a lot of the year’s profit?
It doesn’t seem like a very good business practice to give the house back to the original seller in a worse condition, if I have to give it back.
When the option to buy agreement arrives do the buyers normally have enough money built up to get a normal mortgage?
Thanks
Dino
Re: House is Rundown Now What? - Posted by GL(ON)
Posted by GL(ON) on April 17, 2002 at 08:36:39:
You can sue the tenant for damages. Document every expense (save all your bills and receipts also get 3 estimates and save them to prove your cost was on the up and up), photograph or videotape the damage. TAke them to court if necessary. You can garnish their bank account, their salary.
Until that money comes through (if ever) you use the option deposit they gave you.
If you already spent that, you use the option deposit from your next deal.
As this kind of thing happens all the time, I would like to know how the gurus deal with it. I don’t know a real easy way.
Re: House is Rundown Now What? - Posted by Mike Daly (GA)
Posted by Mike Daly (GA) on April 16, 2002 at 22:02:04:
That’s something you need to decide going into the deal. A good rule of thumb is to have at least 6 months worth of rent tucked away to cover vacancies, repairs, etc. If you don’t then it’s better not to risk doing a sandwich L/O. Instead you can just assign your agreement to your buyer for their option money, if your seller will agree to that. This way you can just pocket the option money and be done – you lose the backend profit but you also lose the risk of not being able to make the payments if your tenant doesn’t work out. Read the archives for more info.
Re: House is Rundown Now What? - Posted by Kristine-CA
Posted by Kristine-CA on April 17, 2002 at 09:44:33:
GL: I heard John Schuab speak at the convention this year and he says he always gives 1/2 of his option money deposit back to the t/bs if they don’t exercise their option. He feels that if they know that going into the deal, that they will take better care of the house and walk away when they can’t pay anymore. Of course, getting the deposit back means an inspection and leaving the house when they say they will. But it seems to me that this is one way to ask for more for a deposit and get a tenant that is on the same page.
But I don’t how this flies when you are in the one in the middle of a l/o sandwich. Seems like the original seller should have thought of this as well. Sincerely, Kristine
Re: House is Rundown Now What? - Posted by Dino
Posted by Dino on April 16, 2002 at 23:31:02:
This means I need a fair amount of money before I can safely do no money down deals.
Thanks
Dino