Posted by ScottE on March 28, 2000 at 23:34:59:
.
L/O what happens if they tear up and skip out - Posted by Joe E
Posted by Joe E on March 28, 2000 at 19:03:34:
When doing a sandwich lease or an assignment lease what happens if the tenant buyer actually tears up the property and skips out on you? Do you turn to the owner and say that it is not my problem? This is one of the few things that I could see as a problem doing L/O.
Make an insurance claim - Posted by William Bronchick
Posted by William Bronchick on March 28, 2000 at 21:48:32:
Most people forget that the typical landlord’s insurance policy covers vandalism. A tenant who “tears up the place” (rarely happens) is not just being a slob, he is vandalizing the place out of anger towards you. Fill out a police report and make an insurance claim.
Make sure, of course that when you make the lease/option agreement with the owner that he changes the policy from a homeowners policy to a landlord policy. Get a power of atty from him to settle the claim with the insurance company.
I have made two such claims and got paid much more than it actually cost me to repair it.
The other solution: keep the money and advertise it as a “handiman rent-to-own”
You Fix It - Posted by Bill K. (AZ
Posted by Bill K. (AZ on March 28, 2000 at 19:17:48:
Joe,
It depends on your agreement with the seller. However, I have yet to see a L/O strategy that doesn’t make YOU responsible for the actions of your tenant/buyer. It’s one of the selling points for getting the owner to let you L/O their property. You can reduce the possibility of this happening by screening your potential tenant/buyers CAREFULLY!
Do the right thing. If your agreement promises that you will repair damage, then do it.
Your reputation is very important in this business.
By the way, if you’re lease/optioning the right types of properties, nice homes - middle to high end, then the quality of your potential tenant/buyers should increase accordingly. It’s not a guarantee, but it’s an indicator. I wouldn’t be lease/optioning low-end properties. You can’t get enough option money to cover the damage if they trash the place.
I hope this helps.
Bill K. (AZ)
Re: Resolve the problem and keep the deal - Posted by Millie I.
Posted by Millie I. on March 28, 2000 at 19:14:41:
You just find another L/O tenant/buyer and keep the deal going. In this business, you cannot be discouraged because there is a potential problem.
The way to succeed is to resolve the problems and continue to do business. I have been in this business for over 10 years. Overcoming problems is just day-to- day operations. I am not saying it doesn’t get to me sometimes. I just have to remind myself that if you remove the problem, it won’t be there anymore.
Good Luck,
Millie I.
I knew that there had to be a way to decrease the risk - Posted by Joe E
Posted by Joe E on March 29, 2000 at 19:29:20:
Thank you for your comments. I am on the edge of going into L/O as an investment vehicle and your comments have been a great help. A lot of investors around town tell me that it is not a good idea to do L/O and list the many disadvantages. I believe one of the biggest risk would be if someone actually damaged the property during the L/O and disappeared. I knew that there had to be a way to decrease the risk and it sure looks like L/O is not that bad after all. Thank you.
Joe E