Posted by Heather -Tx on September 07, 2003 at 13:25:41:
I haven’t done the L/O before, but I am of the same frame of mind as you… because even though I am doing rehabs (only a couple so far) Those people that have worked on mine, and also the new buyers have sent family members my way with possible other deals because they liked the way I worked.
If the seller has a family member or friend in the same position… they would be more than happy to send someone your way if you preformed on your promise, and if you went “above and beyond” what you promised, I’m sure they would tell this also to the people they sent your way. It’s really not a “wrong or right” It’s a question of how you yourself want others to see you. They will see you good either way more than likely… but letting off on that payment that someone else was already making ?? You’d be on a pedastal.
Like I said… I’m new myself… only a couple rehabs and no L/O. But I like that my workers and buyers are sending their friends and family my way because they see my ethics in my investing.
Hope this Helps,
Heather_Tx
PS If this was a marginal deal, I will add, I would say keep the payment, but if you are making a good amount in it, why not do what makes not only you feel good, but your buyers and sellers also. You have to make your profit… but you don’t have to get rich in one deal.
This is a question for those of you who buy subject to and then sell on a lease option AND require that the seller continue to make payments for the next 2-3 months…
Say the seller agrees to make the next 2 payments. You then are able to get a tenant/buyer into the property within 1 month. Do you still have the seller make that 2nd payment or do you feel that it is more “ethical”/“responsible”/“doing the right thing” to tell the seller that you have great news, you have a tenant buyer earlier than you planned and will start to make the payments the following month and they don’t have to make that 2nd payment? This doesn’t have to be in the contract, of course, but is more of a question of what feels right.
This scenario sits well with me but my husband says that this type of attitude is not one that goes along with being successful in business. I say it is about doing what is right. He says that they’ve agreed to the 2 months of payments and if it only takes one month then that extra money in my pocket is part of the compensation that I get for the risk I took and the service that I provided.
Just wondering where those of you who encounter this type of situation stand…
Posted by Brad Crouch on September 07, 2003 at 14:24:48:
Mo,
One thing to remember is that when you are renting, the rent is paid in advance. But when you are paying a mortgage, the payments are made in arrears.
So when the seller/optionor is paying a few extra months of payments after they have relenquished possession of the property, one of those payments (the first) is actually their own expense for the last month they lived in the house.
There is an old saying, “whether you rent or whether you buy, you pay for the place you occupy”.
Posted by David on September 07, 2003 at 13:50:13:
Having done several of these types of transactions I you are well within your right to have the seller make the payments for 2 months if that was your agreement. If you have a property that has little equity or the buyer doesn’t have a significant down payment having a month or two of without making payments can sure help you with your cash flow.
lease option ? - doing what is “right” - Posted by Franklin
Posted by Franklin on September 07, 2003 at 11:07:34:
Isn’t helping someone in trouble the right thing to do? It’s not un-ethical for you to make money.
Now, if you gave the seller an agreement that if you find a buyer/TB before the 2 month expiration then you would let them stop making the payments, even if it was just verbal, you should live up to your agreement.
I have an idea…give that extra money you made to a charity.