Hey Emmett,
I did an assignment on a l/o deal a few months ago that needed new carpet and paint. I had a very tought time marketing it. In 2 months, all I had were 2 applications. If I were you, I would ask the seller to fix the problem or ask that your payments start in 90 days or longer to give you enough time to market the house.
I am still kind of new to lease options but my experience has been that homes that need work take longer to sell and you really cannot get enough money upfront.
Hope this helps!
Tarun
Posted by Emmett-NC on March 03, 2000 at 17:44:50:
Hey all! My question is concerning the condition of the home. The home (from what I can tell) only has wear and tear on it. It needs interior paint, and the house has a large wood back deck that needs some touch up. My question is how much do I demand that the seller do before I sublease to a T/B? Should I show the home in that condition? It is not in need of rehab, so I was not thinking of the handy man L/O thing. Have any of you had houses that needed cosmetic stuff, and get your T/B to accept it and fix them? I have numerous people with $$ who want to get into the house due to its location…(right by the lake, 2 seconds to the mall) But the overall condition has me a lil uneasy. I appreciate any help and guidance you folks may provide. Thanks!!
Re: Need help with L/O deal… - Posted by GregNorman
Posted by GregNorman on March 03, 2000 at 23:27:15:
Emmett,
I try to turn it into a benefit. If I feel the sellers have some money I’ll tell them that I’ll fix it and have them pay me back (only if they sign the agreement). I tell them I work w/ all kinds of folks who fix places up so they don’t have to worry about handling all of that stuff. I tell them my guys are cheap and can do a good job. I like to keep making them the same rent payment and bill them for the difference. That way if it’s a bit painful for them to make the repair reimbursement, I’d rather get my money back in bits (w/ maybe a little interest) than to force them to make some huge payment that may cause them to get behind on their mortgage payment. Usually if I hand them a big bill, they’ll let me know right then and there if they are going to have trouble making the payment. I also don’t start the lease until at least 60 days after signing when fixing up. You can usually carpet and paint it in less than 2 weeks which gives you 45 days to market it (and if you find someone in 15 days you get a free rent payment!). The above only applies if I’m doing a sandwich l/o.
Now if the neighborhood is sketchy, or there isn’t a spead between the two monthly payments, or it needs a bunch of work, I’ll shoot for an assignment. But keep in mind, the rent should probably be really low to entice a t/b to fix it up while still allowing you to get plenty of cash up front. If the rent is at market value, you won’t get much money up front.
Kick some butt down there. It was a pleasure meeting you in Atlanta.
Emmett you can approach this two ways. The first thing I would do is make the seller aware that it is normal practice to make sure the inside area is in good shape before renting, i.e. the painting. However, you will take care of that for him since I’m sure he doesn’t want to do it.
I would handle the cost of painting in one of two ways: 1. Subtract the rent payments from the cost of painting all at once. In that case, you may not owe a rent payment for a few months. 2. Divide the cost of the painting over a 12 month period and reduce the rent by that amount each month.
Remember though, you should be able to receive all of your money spent for the painting from your T/B in the form of their option money.
I agree with the post above that you should not show the place until the inside is in good condition. I wouldn’t worry about the deck, it’s the inside that really matters in most T/B eyes.
Use your sales techniques to show how the seller will benefit from you painting the place and getting him to agree with one of the two options shouldn’t be a problem.