Jump to content
Fantasy Football - Footballguys Forums

*** Official Real Estate Forum ***


Recommended Posts

Question for the prosReguarding my "flip" thats not selling. Not even an offer. Lowered the price 5K and still nothing. Anyway..My question is about doing a lease option. If the house is priced at 129,900 what kind of lease option $ should I ask for? Whats the best way to figure the rent? I have a rough idea based on what I have going out each month (my min, about $750) but think it should probably rent for 900-950?Also is there a downside to the lease option?One more thing, if I decide to do this, do I just put an ad in the paper? After that?

My answer would be different depending on whether you're the buyer or the seller. From the seller's standpoint, it's pretty easy. Get as much down as you can....2% min, 5% would be best. Looks like your rent amount is fair, jack up the rent $250 and offer $200 back per month. Ad in the paper works great, those lease purchase/option types eat that stuff up. Put it on the sign too as most of those buyers are driving around looking for a place. Verbal agreement is the best as it's not enforceable, scribble something up if you must. Don't waste your time with a lawyer.Not if you were the buyer my answer would be vastly different.edit to add: Be sure to hit them up for repairs in the lease too. They'll be so excited about the lease option/purchase they'll agree to most anything. Edited by BassNBrew
Link to post
Share on other sites
  • Replies 3.5k
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

Popular Posts

So glad this thread is still alive. I am up to 300+ units,  A 50 unit apartment building, and 200+ units simple walking distance from my back door.  Quality infrastructure, although I am losing m

I've had numerous realtors call me to ask if I'm selling anything.  We just had a long term tenant move out of a 3/2 sfh, I'm tempted to sell.  We should get about 6-7x what we paid for it 9 years ago

best worst humble brag of the year nomination.  

I always wondered how these lease to own options work. would someone mind explaining it to me like im an idiot (i am).

say for instance i want a rent to own place that has a 200k purchase price.

rent is say 1,000 per month.

so like would this typically be 800 a month in rent and then 200 towards the bottom line of the house? and then when i reach a point of paying on the house....say 24 months (4800 equity) then that will be applied as the downpayment and then i will take a loan out to cover the rest and then take over mortage payments in the same range and now own the place?

maybe what i said made no sense. can some one explain it from the buyers perspective.

additionally, is this something that is smart to do from a buyers persepctive?

pros/cons?

thanks!

Link to post
Share on other sites

Hey Jeff, I have a Maryland Real Estate question for you. I live in Baltimore County and am looking to upgrade out of my townhome into a single family. I'm debating between buying a new home to be built by Ryan or buying a existing home.

The appealing part about having the home built is that it will give me until October to sell my current house and get financing squared away. I've read that rates should come down even more later this year. The property is 1/3 acre on a one cul de sac development.

A comparable existing home may be a slightly better deal(10-20K) due to being able to negotiate the price and decks having already been added etc. Problem is, all the lots are 6-7,000 sq ft. Half of what I can get with the new home.

I live between Baltimore City and Aberdeen. I've read a lot about the Proving Grounds in Aberdeen getting 20-60,000 more highly ranking jobs between now and 2012. This should help the value of any property rise.

Do you have an opinion either way? I am pretty much sitting right on top of the fence on this one.

Edit: If anyone else has an opinion on this, please feel free to chime in. I addressed Jeff since I know he has some knowledge on the area.

Edited by avoiding injuries
  • Like 1
Link to post
Share on other sites

Question for the prosReguarding my "flip" thats not selling. Not even an offer. Lowered the price 5K and still nothing. Anyway..My question is about doing a lease option. If the house is priced at 129,900 what kind of lease option $ should I ask for? Whats the best way to figure the rent? I have a rough idea based on what I have going out each month (my min, about $750) but think it should probably rent for 900-950?Also is there a downside to the lease option?One more thing, if I decide to do this, do I just put an ad in the paper? After that?

My answer would be different depending on whether you're the buyer or the seller. From the seller's standpoint, it's pretty easy. Get as much down as you can....2% min, 5% would be best. Looks like your rent amount is fair, jack up the rent $250 and offer $200 back per month. Ad in the paper works great, those lease purchase/option types eat that stuff up. Put it on the sign too as most of those buyers are driving around looking for a place. Verbal agreement is the best as it's not enforceable, scribble something up if you must. Don't waste your time with a lawyer.Not if you were the buyer my answer would be vastly different.edit to add: Be sure to hit them up for repairs in the lease too. They'll be so excited about the lease option/purchase they'll agree to most anything.
For those who don't know (or don't care to dig for this) BnB is adamantly against lease options, in case it wasn't blatantly obvious.He also lives in the People's Republic of North Carolina where this legitimate transaction method in every other state was ridiculously legislated away.He's also a property manager - so there's your bias point as well.
Link to post
Share on other sites

I always wondered how these lease to own options work. would someone mind explaining it to me like im an idiot (i am).say for instance i want a rent to own place that has a 200k purchase price.rent is say 1,000 per month.so like would this typically be 800 a month in rent and then 200 towards the bottom line of the house? and then when i reach a point of paying on the house....say 24 months (4800 equity) then that will be applied as the downpayment and then i will take a loan out to cover the rest and then take over mortage payments in the same range and now own the place?maybe what i said made no sense. can some one explain it from the buyers perspective.additionally, is this something that is smart to do from a buyers persepctive?pros/cons?thanks!

Lease / Option is a good way to sell a property. Why? The buyer thinks that they are buying the property, and for whatever reason (usually bad credit) they can't buy a house. The seller gets a "buyer" who is paying on time (else they lose the option to buy) and are treating the house well as they want to own it.The buyer has to put a sizeable amount up front (this is the NON-REFUNDABLE Option Consideration, or NROC). Then they pay above market rent for the place and get credits toward the purchase. They also can negotiate the future sales price. Hopefully they are fixing their credit so they can qualify to buy the place in a year or so.The downside? Most buyers can't execute. 70% of L/O's fail. They move, divorce, transfer, don't want to buy, credit not fixed - whatever. That's what happens. They are out the NROC and have to try again.The seller wins and loses. They win as they had a tenant and the NROC and the rent. They lose as they lost their buyer, but they win again as now they have a house to L/O again.BnB thinks this is a scam, as does the state of NC as some naive buyers didn't understand what they got into and lost $. Options have risks on the buyer end for sure, so BnB would suggest you rent a home and fix your credit then buy a year or two later. That's a decent option - unless prices are escalating rapidly, or you need to get into a neighborhood and only L/O's are available. Hope that helped.
Link to post
Share on other sites

Okay guys, here's my current situation.Current home: Jointly owned with a relative - I am to inherited their portion of the property. It was a rental to former in-laws (I know it was bad, but it was the right life decision if bad $ decision), but I now occupy. No mortgage, comp houses on the street are now going for $100K, we paid $50K about 6 years ago. Rents are roughly $800-825, tenant pays all utilities (including water) except trash & sewer. Tax burden is roughly $2650/yr. Zip is 19023, on the fringe of 19018. Creek behind property is not a flood risk, and cemeteries on other side of creek.1st: Is this a average or better rental property? Rents have gone up mostly in line with tax increases - breakeven has been in the 4th month of occupancy the last 6 years. I don't know if that's good or bad. I'm living here, so you can assume home is in good condition.2nd: Let's say I owned this outright, which I can do pretty much at will without a mortgage. Is this the kind of place you would sell, and roll the proceeds into a new home, or would you keep & rent.

What's the neighborhood like as far as homeowners vs. renters?The question is, if you sell, what would you do with the $ and where would you live?So you are putting out $200-225 a year in expenses and getting $800-825 a month in rent. That's $600 to pay your expenses, but you have no mortgage.So you can get $7200 a year.Owning a property that generates $7200 a year is a good thing, but if you can sell it for $100K and roll that $ into a 9-10% return (netting 90K at sale, 10% to sell it with a realtor and costs, worst case). 90K at 8% gives $7200.Do you want to be a landlord or do you want to find a way to have the money work for you, earning over 8%?The answer as to if this is a good rental - it depends. Good tenant, appreciating market, easy to manage, no maintance, sure. Otherwise, it could be a big pain.Consider selling it on a lease option, where they put $3-5K down on the house and pay $800-900 a month to live there while they gain credit towards buying it. That's like renting it but also selling it (at a future date).Lots of options. All depends on what you personally want to do.PM me for more specifics if you want.
Jeff:Thanks for the answer. Neighborhood is mostly owners, with renters in 2 groups: those looking to buy in the neighborhood, and those who are not. Honestly, there have been some lease-to-purchase deals on the street.Looking at the math is that when I'm ready to sell, I should probably not keep this property to rent. I probably won't be ready for a bit yet, but I'm using the time with no mortgage to amass cash at a fairly decent pace.My relative wants to gift the other half of the house to me now - I can't think of a reason NOT to do that at this time, it decreases decision complexity.
Link to post
Share on other sites

Hey Jeff, I have a Maryland Real Estate question for you. I live in Baltimore County and am looking to upgrade out of my townhome into a single family. I'm debating between buying a new home to be built by Ryan or buying a existing home. The appealing part about having the home built is that it will give me until October to sell my current house and get financing squared away. I've read that rates should come down even more later this year. The property is 1/3 acre on a one cul de sac development. A comparable existing home may be a slightly better deal(10-20K) due to being able to negotiate the price and decks having already been added etc. Problem is, all the lots are 6-7,000 sq ft. Half of what I can get with the new home.I live between Baltimore City and Aberdeen. I've read a lot about the Proving Grounds in Aberdeen getting 20-60,000 more highly ranking jobs between now and 2012. This should help the value of any property rise. Do you have an opinion either way? I am pretty much sitting right on top of the fence on this one.Edit: If anyone else has an opinion on this, please feel free to chime in. I addressed Jeff since I know he has some knowledge on the area.

Yes I know the area quite well. What "a.i." is referring to is the Base Realignment And Closures, or "BRAC" program for the US Military. Jobs are coming to Aberdeen Proving Grounds (APG) from Fort Monmouth mostly (NJ). That's slated for several years out though, but it does bode well for that area.Prices will appreciate over time, but this timeline you're proposing is a few months. Little if any impact. It's also an average market in Maryland right now. The lower the price range and the better the location, the quicker things are selling. For months now many places haven't sold even if priced correctly.
Link to post
Share on other sites

Some zip codes to look at:077010775207716077480776007704Currently in a townhome, but looking for 3-4 BR to give the kids some space.It is a high-end area, but hoping there may be some areas where some deals could exist.TIA

BBWC, can you give a little more detail? Are you simple looking for a SFH, or something else? Are you looking to rent another floor like a multifamily of some sort? How much are you looking to spend? Handy with tools? Etc...TIA.
Simple SFH...not looking for a fixer upper, but would not necessarily need to be in move in condition either. Rumor has it that the market in these areas has dropped off after a steep climb over the last few years, so I was just checking in here to see if anyone had better knowledge of the market at the present time.
I did not see a response based on my update above, so reposting it for review. Also, it may be in the thread, but with foreclosures going up, what are some resources the common man can access to potentially take advantage of said market?
Link to post
Share on other sites

I always wondered how these lease to own options work. would someone mind explaining it to me like im an idiot (i am).say for instance i want a rent to own place that has a 200k purchase price.rent is say 1,000 per month.so like would this typically be 800 a month in rent and then 200 towards the bottom line of the house? and then when i reach a point of paying on the house....say 24 months (4800 equity) then that will be applied as the downpayment and then i will take a loan out to cover the rest and then take over mortage payments in the same range and now own the place?maybe what i said made no sense. can some one explain it from the buyers perspective.additionally, is this something that is smart to do from a buyers persepctive?pros/cons?thanks!

Lease / Option is a good way to sell a property. Why? The buyer thinks that they are buying the property, and for whatever reason (usually bad credit) they can't buy a house. The seller gets a "buyer" who is paying on time (else they lose the option to buy) and are treating the house well as they want to own it.The buyer has to put a sizeable amount up front (this is the NON-REFUNDABLE Option Consideration, or NROC). Then they pay above market rent for the place and get credits toward the purchase. They also can negotiate the future sales price. Hopefully they are fixing their credit so they can qualify to buy the place in a year or so.The downside? Most buyers can't execute. 70% of L/O's fail. They move, divorce, transfer, don't want to buy, credit not fixed - whatever. That's what happens. They are out the NROC and have to try again.The seller wins and loses. They win as they had a tenant and the NROC and the rent. They lose as they lost their buyer, but they win again as now they have a house to L/O again.BnB thinks this is a scam, as does the state of NC as some naive buyers didn't understand what they got into and lost $. Options have risks on the buyer end for sure, so BnB would suggest you rent a home and fix your credit then buy a year or two later. That's a decent option - unless prices are escalating rapidly, or you need to get into a neighborhood and only L/O's are available. Hope that helped.
helped a lot. thanks a ton. not that i ever really wanted to do this, but have always been curious as to what it entailed.
Link to post
Share on other sites

Some zip codes to look at:077010775207716077480776007704Currently in a townhome, but looking for 3-4 BR to give the kids some space.It is a high-end area, but hoping there may be some areas where some deals could exist.TIA

BBWC, can you give a little more detail? Are you simple looking for a SFH, or something else? Are you looking to rent another floor like a multifamily of some sort? How much are you looking to spend? Handy with tools? Etc...TIA.
Simple SFH...not looking for a fixer upper, but would not necessarily need to be in move in condition either. Rumor has it that the market in these areas has dropped off after a steep climb over the last few years, so I was just checking in here to see if anyone had better knowledge of the market at the present time.
I did not see a response based on my update above, so reposting it for review. Also, it may be in the thread, but with foreclosures going up, what are some resources the common man can access to potentially take advantage of said market?
You are up in NJ correct?Check out the local chapter(s) of Real Estate clubs. Nominally $100-200 a year to join - but man is it worth it. You'll find so much info there it's scary. Most are helpful (but some are sharks, be careful), and if you find a deal there it's worth way WAY more than the $200.I found a nice deal recently from a wholesaler at my RE club. He sold it to me, making $, and I fixed it up for resale and will make some as well. Buyer gets a newly renovated house.www.creonline.com has a link to local RE clubs on the left last I checked.
Link to post
Share on other sites

I always wondered how these lease to own options work. would someone mind explaining it to me like im an idiot (i am).say for instance i want a rent to own place that has a 200k purchase price.rent is say 1,000 per month.so like would this typically be 800 a month in rent and then 200 towards the bottom line of the house? and then when i reach a point of paying on the house....say 24 months (4800 equity) then that will be applied as the downpayment and then i will take a loan out to cover the rest and then take over mortage payments in the same range and now own the place?maybe what i said made no sense. can some one explain it from the buyers perspective.additionally, is this something that is smart to do from a buyers persepctive?pros/cons?thanks!

Lease / Option is a good way to sell a property. Why? The buyer thinks that they are buying the property, and for whatever reason (usually bad credit) they can't buy a house. The seller gets a "buyer" who is paying on time (else they lose the option to buy) and are treating the house well as they want to own it.The buyer has to put a sizeable amount up front (this is the NON-REFUNDABLE Option Consideration, or NROC). Then they pay above market rent for the place and get credits toward the purchase. They also can negotiate the future sales price. Hopefully they are fixing their credit so they can qualify to buy the place in a year or so.The downside? Most buyers can't execute. 70% of L/O's fail. They move, divorce, transfer, don't want to buy, credit not fixed - whatever. That's what happens. They are out the NROC and have to try again.The seller wins and loses. They win as they had a tenant and the NROC and the rent. They lose as they lost their buyer, but they win again as now they have a house to L/O again.BnB thinks this is a scam, as does the state of NC as some naive buyers didn't understand what they got into and lost $. Options have risks on the buyer end for sure, so BnB would suggest you rent a home and fix your credit then buy a year or two later. That's a decent option - unless prices are escalating rapidly, or you need to get into a neighborhood and only L/O's are available. Hope that helped.
It is a scam for the most part. I just had a young couple come into my office who got clipped for 5 grand. Everyone has been trashing the sub-prime lenders, most lease/option guys are sub-prime lenders who aren't regulated by the Truth in Lending Act. After looking at this couples credit, there was no chance in hell they'd ever be able to get a loan for a house. Basically some investor just stole their money and set them further back from being able to legitimately buy a home. Most people who are poor at finances and have been told no by the lenders are easy targets. Don't throw your money away on rent when you can rent to own. Sure you're paying above market rent, but you get to pretend that you're an owner. Furthmore, I can't understand why someone would limit their population of potential homes to available lease/option homes when a year or two later they could look have the entire population of available to chose from. The best use of the lease/option is for someone who's capable of buying a home that has to unload a home first prior to getting approved for a mortgage.
Link to post
Share on other sites

Okay guys, here's my current situation.Current home: Jointly owned with a relative - I am to inherited their portion of the property. It was a rental to former in-laws (I know it was bad, but it was the right life decision if bad $ decision), but I now occupy. No mortgage, comp houses on the street are now going for $100K, we paid $50K about 6 years ago. Rents are roughly $800-825, tenant pays all utilities (including water) except trash & sewer. Tax burden is roughly $2650/yr. Zip is 19023, on the fringe of 19018. Creek behind property is not a flood risk, and cemeteries on other side of creek.1st: Is this a average or better rental property? Rents have gone up mostly in line with tax increases - breakeven has been in the 4th month of occupancy the last 6 years. I don't know if that's good or bad. I'm living here, so you can assume home is in good condition.2nd: Let's say I owned this outright, which I can do pretty much at will without a mortgage. Is this the kind of place you would sell, and roll the proceeds into a new home, or would you keep & rent.

What's the neighborhood like as far as homeowners vs. renters?The question is, if you sell, what would you do with the $ and where would you live?So you are putting out $200-225 a year in expenses and getting $800-825 a month in rent. That's $600 to pay your expenses, but you have no mortgage.So you can get $7200 a year.Owning a property that generates $7200 a year is a good thing, but if you can sell it for $100K and roll that $ into a 9-10% return (netting 90K at sale, 10% to sell it with a realtor and costs, worst case). 90K at 8% gives $7200.Do you want to be a landlord or do you want to find a way to have the money work for you, earning over 8%?The answer as to if this is a good rental - it depends. Good tenant, appreciating market, easy to manage, no maintance, sure. Otherwise, it could be a big pain.Consider selling it on a lease option, where they put $3-5K down on the house and pay $800-900 a month to live there while they gain credit towards buying it. That's like renting it but also selling it (at a future date).Lots of options. All depends on what you personally want to do.PM me for more specifics if you want.
I'm behind here, but let me say that IF you had a new mortgage on this property, it would be a Dog. $100K property that rents for $800.00 a month is a Dog with a brand new $92K mortgage (Assuming 10% down)Anything, including this one is a champ with no mortgage. Just do the math.
Link to post
Share on other sites

Question for the prosReguarding my "flip" thats not selling. Not even an offer. Lowered the price 5K and still nothing. Anyway..My question is about doing a lease option. If the house is priced at 129,900 what kind of lease option $ should I ask for? Whats the best way to figure the rent? I have a rough idea based on what I have going out each month (my min, about $750) but think it should probably rent for 900-950?Also is there a downside to the lease option?One more thing, if I decide to do this, do I just put an ad in the paper? After that?

Random,Exactly like I said months ago....In our area of the country, if you haven't sold that house by the middle of November, you will still have it in April (You might be lucky enough to be in escrow, but you will still own it in April). RE just doesn't move in that season unless you get an out of town transfer. If you had sold it before now, I would have been flabbergasted.The only real way to sell in the winter is to be stupid with the price or to find a way to get in with new transfers. If you remember at the time, I said that if I could carry it, I wouldn't have dropped the price much if any and held out for April. If you couldn't carry comfortable, slash the price.People of Means don't file a 1040-EZ and have a return in Mid February. They get into the accountant and get a return (Down payment) in mid April. That's the people you need selling at $130K in our area of the country. You are a month tops away from your buying season.I'm not saying it sells in the next month, but after waiting through all the slow pipe dream time, it seems a hard pill to swallow to drop your pants right before you actually have a market for your property.Those are my thoughts.As for the Rent to own/Lease option: I am clearly on record in this thread as being CON. It doesn't matter what side of the transaction you are on, if you are going to get used and abused, it's going to be with the lease option. There is too much money in play, and too much trust between total strangers required. It never works. I couldn't caution you enough to be careful, very careful.
Link to post
Share on other sites

I always wondered how these lease to own options work. would someone mind explaining it to me like im an idiot (i am).say for instance i want a rent to own place that has a 200k purchase price.rent is say 1,000 per month.so like would this typically be 800 a month in rent and then 200 towards the bottom line of the house? and then when i reach a point of paying on the house....say 24 months (4800 equity) then that will be applied as the downpayment and then i will take a loan out to cover the rest and then take over mortage payments in the same range and now own the place?maybe what i said made no sense. can some one explain it from the buyers perspective.additionally, is this something that is smart to do from a buyers persepctive?pros/cons?thanks!

Lease option 101:For the buyer-Own a House you can't sell. This is important because if you could sell it using traditional methods and get paid right now today, you would. Of course this takes into account you aren't the sleaziest of weasels that make up a good chunk of the Lease option guys, and that you actually would like to be honest and aren't out to screw people over as a business model, if so, jump down.So you can't sell the house. WHY? Well, you took out 110% loan, rolled in the closing costs, took cash out the works. You used a Sub prime lender with an inflated appraisal in the first place, and now the two year arm has kicked in and you went from 6% to 9.625%. At this point, using your example, you own a home worth $110K that you owe $160k on. Sure you walked with $20K at the closing, but it's all been spent on Beer or a new car now worth half the value, something, you don't have that cash anymore.So you are upside down by $50K. You can't sell it for your payoff. Odds are the house is in terrible shape, doesn't meet code, run down, stained carpet, everything. If it was in good shape, you might be able to sell it outright, but you can't.Add on that you don't understand value, and you fell you are entitled to make $20K when you sell it, never taking into account that you already walked with $20K when you bought it. That money is gone, lord knows you DESERVE more money.So you run an ad in the paper and put up a sign. Now, you need to find your buyer correctly. What you need is someone who can't begin to manage money, but makes a lot of it. Infact, they think they have money for days. Some one who works at the GM plant AND has destroyed their credit. Now this is important because now they are desperate. They can't buy with the terrible credit, and since they always screw everything up, they can't rent anymore with the couple of evictions on their record. You want the ones where even their family members won't let them live with them anymore.You will be able to pick them out. They will be the ones in the New car that is way nicer than yours, but the bottom foot of the car is full of fast food wrappers going back to 18 months old at the bottom of the pile. They will first shake your hand with the left hand as they don't want to juggle the cigarette out of their right hand. There will be at least 4 other people with them. Might be kids with mom, but they will come in mass.Now, your job is to understand they are desperate, and get $3-5K off them with the promise of no background check as they are buying the property. You need to establish a ridiculously high price justifying it with the thought that after they pay for 10 years, the value of the home will be greater in a decade from now, so you figure out what 10 years of wild appreciation will be, and tack it on to the price, say $220K. You don't have to worry about what it would actually appraise for, it will never get that far. Make it a Half Million, it won't matter. If the going rental rate is $800.00, make sure to get $1,100.00 a month minimum. When they fail, you will be glad you did, the damage to your property is going to be massive, get as much as you can now to cover.PLEASE make sure they are responsible for all the repairs. Since you have just pulled their tax refund money off of them, you know they have no reserves, nor do they know how to save. At this point, they have no money, so be sure to make them responsible for the 50 year old roof (With the 30 year shingles still on it) and the old gravity fed gas furnace. Without this step, you are leaving maybe a 1% chance they might succeed in buying the home. You need to get that off the table.Wait for the first time they are a day late with the RENT (We all know it's never going to be anything more than rent) you jump in and cancel the option, and evict.Don't bother fixing up the house at all. The next group of 5 people that piles out of a Dirty brand new car where one of them is holding a Pit bull puppy in his hands and brags about how he breads his Pits to not be violent will be just as desperate and give you another $3-5K. Just keep the process up 2-3 times a year, never fix anything. If your property is the scene of a Murder, you just write it into the contract for the next group that they have to change out the carpet. Who cares, you only go after desperate people who don't have choices.If you are a Buyer-Work the up front money down to under a Grand. Maybe $400.00. Remember, the guy selling the place is just as screwed as you are, he is desperate.So you have to make repairs, please you aren't making them. If the furnace breaks, thats what the stove is right there in the home for. If things get tight and your water is turned off for non payment, remember that you can still use the toilet sitting down maybe 10 times before it fills up. Many more times standing up.Who cares, you won't be living there in 6 months anyway.Bread all the Pit bull puppies you can, selling them pays the bills, and everyone already knows you raise the best Pits in town.If the carpets get too trashed, rip the out and throw them away. There is a floor under them, and hey, you are buying the house, you can do whatever you want to in YOUR house. Need another window in the bedroom, go ahead and cut the hole. You're buying the house, do whatever you want, it's your house. So you never got around to putting anything in that hole in the bedroom, it's OK, that damn seller is kicking you out of YOUR home! In fact, just because you didn't pay rent, he thinks he can kick you out of your Property!?!?!?! Tear everything up. It belongs to you, you can tear up anything you want. Take all the doors off and have a bonfire in the back yard. They are your doors aren't they?Lets say that the roof does fail. Since you have to fix it, stay in the place as long as you feel like. When it gets too bad, it was only a grand or less if you did it right, just walk away. Once the water damage has buckled most of the floors in the place, just leave. Who cares, there is another desperate seller just around the corner who won't check your background, and take your cash. You have cash, you are the best drug-dealer in the tri-county area. It's credit you don't have.Even if you do everything correct, as the buyer you are above board in every way, when the Sheriff comes around because the seller hasn't paid property taxes in two years, or his mortgage in 6 months, the important thing to remember as you are put into the street is that you paid him. That's what keeps you warm out on the streets in the cold months.
Link to post
Share on other sites

I always wondered how these lease to own options work. would someone mind explaining it to me like im an idiot (i am).

say for instance i want a rent to own place that has a 200k purchase price.

rent is say 1,000 per month.

so like would this typically be 800 a month in rent and then 200 towards the bottom line of the house? and then when i reach a point of paying on the house....say 24 months (4800 equity) then that will be applied as the downpayment and then i will take a loan out to cover the rest and then take over mortage payments in the same range and now own the place?

maybe what i said made no sense. can some one explain it from the buyers perspective.

additionally, is this something that is smart to do from a buyers persepctive?

pros/cons?

thanks!

Lease / Option is a good way to sell a property. Why? The buyer thinks that they are buying the property, and for whatever reason (usually bad credit) they can't buy a house. The seller gets a "buyer" who is paying on time (else they lose the option to buy) and are treating the house well as they want to own it.

The buyer has to put a sizeable amount up front (this is the NON-REFUNDABLE Option Consideration, or NROC). Then they pay above market rent for the place and get credits toward the purchase. They also can negotiate the future sales price. Hopefully they are fixing their credit so they can qualify to buy the place in a year or so.

The downside? Most buyers can't execute. 70% of L/O's fail. They move, divorce, transfer, don't want to buy, credit not fixed - whatever. That's what happens. They are out the NROC and have to try again.

The seller wins and loses. They win as they had a tenant and the NROC and the rent. They lose as they lost their buyer, but they win again as now they have a house to L/O again.

BnB thinks this is a scam, as does the state of NC as some naive buyers didn't understand what they got into and lost $. Options have risks on the buyer end for sure, so BnB would suggest you rent a home and fix your credit then buy a year or two later. That's a decent option - unless prices are escalating rapidly, or you need to get into a neighborhood and only L/O's are available.

Hope that helped.

I see Lease options as too much opportunity for problems for the average person.

That said, it can be a great tool between two honest parties who do not take advantage of each other. It is a GREAT tool in theory.

It's a complete mess in application should either party not be operating in good faith. The absolute biggest shyster weasels in the RE game sell exclusively in Rent to own/Lease option set ups. I know a guy that has been "selling" the same 28 houses for decades. Has yet to sell a single house.

If a Seller could move the house outright to a buyer with a Mortgage, They would. There is always a reason/negative if the seller is willing to Lease option, ALWAYS. Might be that the Price is too high, could be that the house is in poor repair, maybe they can't get the comps they believe should exist for the price they want, there is ALWAYS a reason the seller is willing to forgo money now and do a lease option. HOPEFULLY it's not because they are just one of the many scum who pray on the part of the population that is easy to take advantage of.

Link to post
Share on other sites

Question for the prosReguarding my "flip" thats not selling. Not even an offer. Lowered the price 5K and still nothing. Anyway..My question is about doing a lease option. If the house is priced at 129,900 what kind of lease option $ should I ask for? Whats the best way to figure the rent? I have a rough idea based on what I have going out each month (my min, about $750) but think it should probably rent for 900-950?Also is there a downside to the lease option?One more thing, if I decide to do this, do I just put an ad in the paper? After that?

Random,Exactly like I said months ago....In our area of the country, if you haven't sold that house by the middle of November, you will still have it in April (You might be lucky enough to be in escrow, but you will still own it in April). RE just doesn't move in that season unless you get an out of town transfer. If you had sold it before now, I would have been flabbergasted.The only real way to sell in the winter is to be stupid with the price or to find a way to get in with new transfers. If you remember at the time, I said that if I could carry it, I wouldn't have dropped the price much if any and held out for April. If you couldn't carry comfortable, slash the price.People of Means don't file a 1040-EZ and have a return in Mid February. They get into the accountant and get a return (Down payment) in mid April. That's the people you need selling at $130K in our area of the country. You are a month tops away from your buying season.I'm not saying it sells in the next month, but after waiting through all the slow pipe dream time, it seems a hard pill to swallow to drop your pants right before you actually have a market for your property.Those are my thoughts.As for the Rent to own/Lease option: I am clearly on record in this thread as being CON. It doesn't matter what side of the transaction you are on, if you are going to get used and abused, it's going to be with the lease option. There is too much money in play, and too much trust between total strangers required. It never works. I couldn't caution you enough to be careful, very careful.
Mike, thanks for talking me off the ledge. Really, I mean that. I have already placed the ad in the paper :yes: (runs for 4 days starting today) so I'll probably just let the calls go to my viocemail. I honestly am curious to see if anyone actually calls about it.Anyway you are right, I just need to be patient. Like I said earlier, we have the money to float this as long as we need to, I just dont want to be one of those guys that lost all his profit to holding costs. So I started thinking of ways to unload without losing money or profit. I panicked. Hopefully you're right and I get an offer here in the next month.
Link to post
Share on other sites

Just a shot in the dark here but does anyone have knowledge on real estate for the Sacramento area.

With the market the way it is now would you say it's better to buy this summer or wait a year. I now it's a wide open question but any help would be appreciated.

Thanks

Link to post
Share on other sites

Just one more thing on the Lease Option. Both Mike and BNB say they are for con artists and scum. What pointers would you give someone to make a real attempt at trying to do one fairly?

Only asking because I've already had two calls asking about it and this is the first day in the paper. People are obviously interested and I would be interested in giving it a shot if there were a way to do it "right". Dunno, maybe I can turn one of these into a sale. Are there any other owner financing options that may work better?

Link to post
Share on other sites

Just a shot in the dark here but does anyone have knowledge on real estate for the Sacramento area.With the market the way it is now would you say it's better to buy this summer or wait a year. I now it's a wide open question but any help would be appreciated.Thanks

I know a little bit about the market considering my sister moved in the area last year and moved back recently to So Cal. My understanding is that the market there is under a lot of pressure. I believe I remember reading that foreclosures were high in the area and there is tons of new building going on. A suburb south of Sacramento, the name escapes me currently, was recently named the fastest growing city in the U.S. about 9 months ago and there was tons of new development all around when I was out there. From what I have read, seen, and heard of the market has benefited greatly from the outrageous home values in San Fran (pushing home owners further and further east and in this case northeast) but the market has taken it's turn. If it was me, I would be looking towards the the wait a year closer than the summer.
Link to post
Share on other sites

Just a shot in the dark here but does anyone have knowledge on real estate for the Sacramento area.With the market the way it is now would you say it's better to buy this summer or wait a year. I now it's a wide open question but any help would be appreciated.Thanks

I know a little bit about the market considering my sister moved in the area last year and moved back recently to So Cal. My understanding is that the market there is under a lot of pressure. I believe I remember reading that foreclosures were high in the area and there is tons of new building going on. A suburb south of Sacramento, the name escapes me currently, was recently named the fastest growing city in the U.S. about 9 months ago and there was tons of new development all around when I was out there. From what I have read, seen, and heard of the market has benefited greatly from the outrageous home values in San Fran (pushing home owners further and further east and in this case northeast) but the market has taken it's turn. If it was me, I would be looking towards the the wait a year closer than the summer.
Thanks
Link to post
Share on other sites

If things get tight and your water is turned off for non payment, remember that you can still use the toilet sitting down maybe 10 times before it fills up. Many more times standing up.

:bag: You should take this show on the road Mike!!!
Link to post
Share on other sites

If things get tight and your water is turned off for non payment, remember that you can still use the toilet sitting down maybe 10 times before it fills up. Many more times standing up.

:thumbup: You should take this show on the road Mike!!!
:sadbanana: I enjoyed it as well.
Link to post
Share on other sites

Okay guys, here's my current situation.Current home: Jointly owned with a relative - I am to inherited their portion of the property. It was a rental to former in-laws (I know it was bad, but it was the right life decision if bad $ decision), but I now occupy. No mortgage, comp houses on the street are now going for $100K, we paid $50K about 6 years ago. Rents are roughly $800-825, tenant pays all utilities (including water) except trash & sewer. Tax burden is roughly $2650/yr. Zip is 19023, on the fringe of 19018. Creek behind property is not a flood risk, and cemeteries on other side of creek.1st: Is this a average or better rental property? Rents have gone up mostly in line with tax increases - breakeven has been in the 4th month of occupancy the last 6 years. I don't know if that's good or bad. I'm living here, so you can assume home is in good condition.2nd: Let's say I owned this outright, which I can do pretty much at will without a mortgage. Is this the kind of place you would sell, and roll the proceeds into a new home, or would you keep & rent.

What's the neighborhood like as far as homeowners vs. renters?The question is, if you sell, what would you do with the $ and where would you live?So you are putting out $200-225 a year in expenses and getting $800-825 a month in rent. That's $600 to pay your expenses, but you have no mortgage.So you can get $7200 a year.Owning a property that generates $7200 a year is a good thing, but if you can sell it for $100K and roll that $ into a 9-10% return (netting 90K at sale, 10% to sell it with a realtor and costs, worst case). 90K at 8% gives $7200.Do you want to be a landlord or do you want to find a way to have the money work for you, earning over 8%?The answer as to if this is a good rental - it depends. Good tenant, appreciating market, easy to manage, no maintance, sure. Otherwise, it could be a big pain.Consider selling it on a lease option, where they put $3-5K down on the house and pay $800-900 a month to live there while they gain credit towards buying it. That's like renting it but also selling it (at a future date).Lots of options. All depends on what you personally want to do.PM me for more specifics if you want.
I'm behind here, but let me say that IF you had a new mortgage on this property, it would be a Dog. $100K property that rents for $800.00 a month is a Dog with a brand new $92K mortgage (Assuming 10% down)Anything, including this one is a champ with no mortgage. Just do the math.
Thanks. It's owned outright, so no mortgage worry. It sounds as though I should sell the thing when I move - probably not worth the rental hassle.
Link to post
Share on other sites

Question for the prosReguarding my "flip" thats not selling. Not even an offer. Lowered the price 5K and still nothing. Anyway..My question is about doing a lease option. If the house is priced at 129,900 what kind of lease option $ should I ask for? Whats the best way to figure the rent? I have a rough idea based on what I have going out each month (my min, about $750) but think it should probably rent for 900-950?Also is there a downside to the lease option?One more thing, if I decide to do this, do I just put an ad in the paper? After that?

Random,Exactly like I said months ago....In our area of the country, if you haven't sold that house by the middle of November, you will still have it in April (You might be lucky enough to be in escrow, but you will still own it in April). RE just doesn't move in that season unless you get an out of town transfer. If you had sold it before now, I would have been flabbergasted.The only real way to sell in the winter is to be stupid with the price or to find a way to get in with new transfers. If you remember at the time, I said that if I could carry it, I wouldn't have dropped the price much if any and held out for April. If you couldn't carry comfortable, slash the price.People of Means don't file a 1040-EZ and have a return in Mid February. They get into the accountant and get a return (Down payment) in mid April. That's the people you need selling at $130K in our area of the country. You are a month tops away from your buying season.I'm not saying it sells in the next month, but after waiting through all the slow pipe dream time, it seems a hard pill to swallow to drop your pants right before you actually have a market for your property.Those are my thoughts.As for the Rent to own/Lease option: I am clearly on record in this thread as being CON. It doesn't matter what side of the transaction you are on, if you are going to get used and abused, it's going to be with the lease option. There is too much money in play, and too much trust between total strangers required. It never works. I couldn't caution you enough to be careful, very careful.
Mike, thanks for talking me off the ledge. Really, I mean that. I have already placed the ad in the paper :banned: (runs for 4 days starting today) so I'll probably just let the calls go to my viocemail. I honestly am curious to see if anyone actually calls about it.Anyway you are right, I just need to be patient. Like I said earlier, we have the money to float this as long as we need to, I just dont want to be one of those guys that lost all his profit to holding costs. So I started thinking of ways to unload without losing money or profit. I panicked. Hopefully you're right and I get an offer here in the next month.
If you are already going to get calls, there's no reason to ignore them. You treat it like a Renter/Roomate for your Mother's Home who will live with her. You have $130K on the line, a "Buyer" is going to have maybe a few grand on the line. Full background check, employment, Criminal and CIVIL (Don't forget this one) history, Minimum two Land Lord references where you actually confirm that the "LL" is the owner of record, and not their bong buddy. I'm not saying it never works, but take into account that Jeff is very positive about Lease to Own, and he states that it fails 70% of the time. I think it's more like 95% of the time. If you are going to get calls anyway, take them and talk with them. Come back in a week and tell us who called, you are going to get an eye opening like you haven't had in Years. Epiphany stuff can come out of this next week if you take some of the calls.Best advice I know here is going to be SCREEN, SCREEN, SCREEN. How does the Latin go again? "SELLER beware" :D
Link to post
Share on other sites

Question for the prosReguarding my "flip" thats not selling. Not even an offer. Lowered the price 5K and still nothing. Anyway..My question is about doing a lease option. If the house is priced at 129,900 what kind of lease option $ should I ask for? Whats the best way to figure the rent? I have a rough idea based on what I have going out each month (my min, about $750) but think it should probably rent for 900-950?Also is there a downside to the lease option?One more thing, if I decide to do this, do I just put an ad in the paper? After that?

Random,Exactly like I said months ago....In our area of the country, if you haven't sold that house by the middle of November, you will still have it in April (You might be lucky enough to be in escrow, but you will still own it in April). RE just doesn't move in that season unless you get an out of town transfer. If you had sold it before now, I would have been flabbergasted.The only real way to sell in the winter is to be stupid with the price or to find a way to get in with new transfers. If you remember at the time, I said that if I could carry it, I wouldn't have dropped the price much if any and held out for April. If you couldn't carry comfortable, slash the price.People of Means don't file a 1040-EZ and have a return in Mid February. They get into the accountant and get a return (Down payment) in mid April. That's the people you need selling at $130K in our area of the country. You are a month tops away from your buying season.I'm not saying it sells in the next month, but after waiting through all the slow pipe dream time, it seems a hard pill to swallow to drop your pants right before you actually have a market for your property.Those are my thoughts.As for the Rent to own/Lease option: I am clearly on record in this thread as being CON. It doesn't matter what side of the transaction you are on, if you are going to get used and abused, it's going to be with the lease option. There is too much money in play, and too much trust between total strangers required. It never works. I couldn't caution you enough to be careful, very careful.
Mike, thanks for talking me off the ledge. Really, I mean that. I have already placed the ad in the paper :hophead: (runs for 4 days starting today) so I'll probably just let the calls go to my viocemail. I honestly am curious to see if anyone actually calls about it.Anyway you are right, I just need to be patient. Like I said earlier, we have the money to float this as long as we need to, I just dont want to be one of those guys that lost all his profit to holding costs. So I started thinking of ways to unload without losing money or profit. I panicked. Hopefully you're right and I get an offer here in the next month.
If you are already going to get calls, there's no reason to ignore them. You treat it like a Renter/Roomate for your Mother's Home who will live with her. You have $130K on the line, a "Buyer" is going to have maybe a few grand on the line. Full background check, employment, Criminal and CIVIL (Don't forget this one) history, Minimum two Land Lord references where you actually confirm that the "LL" is the owner of record, and not their bong buddy. I'm not saying it never works, but take into account that Jeff is very positive about Lease to Own, and he states that it fails 70% of the time. I think it's more like 95% of the time. If you are going to get calls anyway, take them and talk with them. Come back in a week and tell us who called, you are going to get an eye opening like you haven't had in Years. Epiphany stuff can come out of this next week if you take some of the calls.Best advice I know here is going to be SCREEN, SCREEN, SCREEN. How does the Latin go again? "SELLER beware" :D
Thanks Mike. Yesterday was the first day it was in the paper and I got three calls (while at work). Took down names and numbers and called each back after work. First two were just asking about the rent $ I said $1100, they said thanks and hung up. The third one inquired on how it worked. I told her I would need 3% of the sale price upfront. She asked what that was and I told her my selling (not asking) price would be 129,900 and 3% of that would be 3,900. She said ok and asked how that worked. I told her it was her promise to me that she was buying, not renting the house. If she purchases at the end of the lease, its hers, if not its mine. She then told me she was off on maternity leave and her husbands income alone qualified them for a 75K home but when she went back to work they would be able to buy more. Ok.She then asked about rent. I told her $1100. She said that was probably out of their range, they were paying 550 right now. I told her its not a typical rental, its a nice house in a nice neighborhood, which she said she already knew the houses on the street were very nice. I then told her to check out the house and if they were interested get back with me and we could see if we could work something out.Here's my thought. I need to stay firm on the 3% down. However, I could take the rent down to $750 and add the difference (1100-750=350/mo) to the sale price at the end of the lease. She made it sound like they wouldn't need a year lease, maybe 3 or 4 months.I know right now Mike is crapping his pants and Jeff is probably smiling ear to ear but I like my idea. Hopefully she calls back and wants to talk.
Link to post
Share on other sites

For Random's Screening Process:

Since you haven't been dealing the average Midwest Rent to Own buyer, thought you might want a few translations.

"Will you work with me on that?" has nothing to do with work but rather means will you break your rules/set standards and just let me have your house, I have no where else to live.

"I have a pitbull" means I am a drug dealer.

"We have a small dog" means we have a pitbull mixed with a horse that weighs well over a hundred pounds and eats neighborhood children.

"There was some minor damage from the kids at our last place, just wear and tear" means my drunken boyfriend of the week beat the heck out of me and now you could drive a dozer through the living room and do no additional damage.

"I don't smoke" means you'll never see me without a lit cigarette in my mouth and a second in my hand. Your pretty home will reek for the next 20 years if you so much as let me stand on the porch for five minutes.

"We are really trying to change our lives around and have recently found Jesus as our personal savior" means we collectively have rap sheets totaling 23 pages, have FICO scores of 475 and are trying to find poor suckers who are going to fall for the "good, religious people" bit.

"God Willing", "God will provide", "God bless you" or other heavy religious talk to you, a complete stranger, means we can't take care of ourselves, and we drift through life.

"My LL isn't a Christian. I'd prefer to deal with nice people." In other words, the LL got sick of listening to their excuses.

"I have $5,200 in cash that I can give you right now" means We are being evicted, need a place immediately and don't want to give you time to check our credit, criminal and eviction histories.

"I'm moving cause my landlord won't fix anything" means I have torn up the house I am living in so bad the current landlord has given up and I need a new sucker.

"My LL is selling" or in other words...they are evicting.

"I'm new to the area." translates to I've been evicted too many times from the neighboring town and am now going to make the rounds in your city.

"We've been living with family" means we don't want you to know the names of the last three LLs that evicted us.

  • Like 1
Link to post
Share on other sites

Thanks Mike. Yesterday was the first day it was in the paper and I got three calls (while at work). Took down names and numbers and called each back after work. First two were just asking about the rent $ I said $1100, they said thanks and hung up.

The third one inquired on how it worked. I told her I would need 3% of the sale price upfront. She asked what that was and I told her my selling (not asking) price would be 129,900 and 3% of that would be 3,900. She said ok and asked how that worked. I told her it was her promise to me that she was buying, not renting the house. If she purchases at the end of the lease, its hers, if not its mine.

She then told me she was off on maternity leave and her husbands income alone qualified them for a 75K home but when she went back to work they would be able to buy more. Ok.

She then asked about rent. I told her $1100. She said that was probably out of their range, they were paying 550 right now. I told her its not a typical rental, its a nice house in a nice neighborhood, which she said she already knew the houses on the street were very nice. I then told her to check out the house and if they were interested get back with me and we could see if we could work something out.

Here's my thought. I need to stay firm on the 3% down. However, I could take the rent down to $750 and add the difference (1100-750=350/mo) to the sale price at the end of the lease. She made it sound like they wouldn't need a year lease, maybe 3 or 4 months.

I know right now Mike is crapping his pants and Jeff is probably smiling ear to ear but I like my idea. Hopefully she calls back and wants to talk.

What does the Husband do? What is her normal line of work? No way they cover the doubled rent, they currently have one income with a child on the way. I have noticed that a Baby is expensive. :confused:

I would move up to 5% down.

But most importantly, just think out loud with me for a second:

Baby on the way means more family expenses. One of them working. Currently paying half the rent.You were able to lead the conversation and set aside the fears she had on the phone. That's what makes my Spidey Sense go off. They have to understand that now is the time they need money, not to spend more money. If they have stated they need more space, and every thing else checks out in every way, then it's just that they can't run a budget well. If you are reaching for $75K, you shouldn't try and get a home for !130K. (As a side note, I don't think $1,100 a month is out of line for a purchase, might be low, you need to get as much as you can for protection)

My biggest concern is that you are already dropping your pants after one day. You can't be afraid to tell people to pound sand, they don't qualify.

Here is my Number one thought to you:

If you decide to move forward with them, get them in front of a Lender who you know and trust, and have that Lender find out if they are real buyers. Have the lender you have used in the past figure out if they can honestly buy. If they could honestly buy within the next few years. If they aren't buyers, then you are a LL.

Any time you are talking with anyone about any aspect of RE, you are learning. Don't stop talking to any of these people, just be so careful. This process is a looser. These deals don't work out, the odds are STEEP against you. It can work, but I doubt it.

Link to post
Share on other sites

Random,I seem to remember that your agent is your Aunt? Can't exactly remember.Anyway, if you sell it LO, are you going to owe your agent a commission?

Correct, she is. Dont know. The contract has to be up soon (I'll check tonight), she's had it listed since Oct/Nov. Is it standard to pay commission if you find your own buyer?
Link to post
Share on other sites

Random,I seem to remember that your agent is your Aunt? Can't exactly remember.Anyway, if you sell it LO, are you going to owe your agent a commission?

Correct, she is. Dont know. The contract has to be up soon (I'll check tonight), she's had it listed since Oct/Nov. Is it standard to pay commission if you find your own buyer?
Depends on the contract you signed. Unless you had it different, the standard contract a RE Agent is going to have you sign states that she gets a commission no matter what. Somewhere in the thread I posted all the available contract forms and what they do.All the Agent wants to do is get the locked in contract in front of you, there are actually about 5 different kind of selling agreements, not that any agent would tell you about though.
Link to post
Share on other sites

Okay guys, here's my current situation.Current home: Jointly owned with a relative - I am to inherited their portion of the property. It was a rental to former in-laws (I know it was bad, but it was the right life decision if bad $ decision), but I now occupy. No mortgage, comp houses on the street are now going for $100K, we paid $50K about 6 years ago. Rents are roughly $800-825, tenant pays all utilities (including water) except trash & sewer. Tax burden is roughly $2650/yr. Zip is 19023, on the fringe of 19018. Creek behind property is not a flood risk, and cemeteries on other side of creek.1st: Is this a average or better rental property? Rents have gone up mostly in line with tax increases - breakeven has been in the 4th month of occupancy the last 6 years. I don't know if that's good or bad. I'm living here, so you can assume home is in good condition.2nd: Let's say I owned this outright, which I can do pretty much at will without a mortgage. Is this the kind of place you would sell, and roll the proceeds into a new home, or would you keep & rent.

What's the neighborhood like as far as homeowners vs. renters?The question is, if you sell, what would you do with the $ and where would you live?So you are putting out $200-225 a year in expenses and getting $800-825 a month in rent. That's $600 to pay your expenses, but you have no mortgage.So you can get $7200 a year.Owning a property that generates $7200 a year is a good thing, but if you can sell it for $100K and roll that $ into a 9-10% return (netting 90K at sale, 10% to sell it with a realtor and costs, worst case). 90K at 8% gives $7200.Do you want to be a landlord or do you want to find a way to have the money work for you, earning over 8%?The answer as to if this is a good rental - it depends. Good tenant, appreciating market, easy to manage, no maintance, sure. Otherwise, it could be a big pain.Consider selling it on a lease option, where they put $3-5K down on the house and pay $800-900 a month to live there while they gain credit towards buying it. That's like renting it but also selling it (at a future date).Lots of options. All depends on what you personally want to do.PM me for more specifics if you want.
I'm behind here, but let me say that IF you had a new mortgage on this property, it would be a Dog. $100K property that rents for $800.00 a month is a Dog with a brand new $92K mortgage (Assuming 10% down)Anything, including this one is a champ with no mortgage. Just do the math.
Mike,Think outside the LL box.If you rent a million dollar property with no mortgage for $1,000 a month, is that a champ? Really?If I told you you can sell it for $1M, would you really prefer to own it and just get 0.1% a month return?Extremes highlight the example here - SELL and use the $1M somewhere else. Even a CD at 3% would beat this.
Link to post
Share on other sites

Lease Options.

First off, I'm not 100% endorsing them, but you're right in that I'm more "pro" on them than Mike or BnB is. That goes without saying for BnB - he sees the down side all the time as a property manager - only renters coming his way - so sob stories come to him.

Mike is a LL and has seen / heard it all.

Random MIGHT have found a good one, but understand that their credit most likely WILL SUCK. That is part of the deal.

Why? If they had good credit, they'd be buyers, not L/O shoppers. Simple math.

Now - find out WHY their credit sucks. If it can be repaired and/or you know what happened, then there could be a win-win. Understand one thing - the risk is mitigated by the NROC ($ up front). You wouldn't ask for this if you really had this as a rental.

You're getting 3-6 months rent up front (and a security deposit is also a good idea - remember that they aren't owners, they are leasers until they buy - so you should get $100 as a security deposit, not just for the $ sake but to establish that they are NOT the owners but leasing - establish that legal fact).

I'd also make them sign up for credit counseling. Force them into it, even offer to pay for some/all of it.

L/Os shouldn't be sold for > 24 months. 12-18 max. You want them to buy. Help them get there. Fix the credit, get them on their feet.

L/O if and when done property help everyone.

Link to post
Share on other sites

Okay guys, here's my current situation.Current home: Jointly owned with a relative - I am to inherited their portion of the property. It was a rental to former in-laws (I know it was bad, but it was the right life decision if bad $ decision), but I now occupy. No mortgage, comp houses on the street are now going for $100K, we paid $50K about 6 years ago. Rents are roughly $800-825, tenant pays all utilities (including water) except trash & sewer. Tax burden is roughly $2650/yr. Zip is 19023, on the fringe of 19018. Creek behind property is not a flood risk, and cemeteries on other side of creek.1st: Is this a average or better rental property? Rents have gone up mostly in line with tax increases - breakeven has been in the 4th month of occupancy the last 6 years. I don't know if that's good or bad. I'm living here, so you can assume home is in good condition.2nd: Let's say I owned this outright, which I can do pretty much at will without a mortgage. Is this the kind of place you would sell, and roll the proceeds into a new home, or would you keep & rent.

What's the neighborhood like as far as homeowners vs. renters?The question is, if you sell, what would you do with the $ and where would you live?So you are putting out $200-225 a year in expenses and getting $800-825 a month in rent. That's $600 to pay your expenses, but you have no mortgage.So you can get $7200 a year.Owning a property that generates $7200 a year is a good thing, but if you can sell it for $100K and roll that $ into a 9-10% return (netting 90K at sale, 10% to sell it with a realtor and costs, worst case). 90K at 8% gives $7200.Do you want to be a landlord or do you want to find a way to have the money work for you, earning over 8%?The answer as to if this is a good rental - it depends. Good tenant, appreciating market, easy to manage, no maintance, sure. Otherwise, it could be a big pain.Consider selling it on a lease option, where they put $3-5K down on the house and pay $800-900 a month to live there while they gain credit towards buying it. That's like renting it but also selling it (at a future date).Lots of options. All depends on what you personally want to do.PM me for more specifics if you want.
I'm behind here, but let me say that IF you had a new mortgage on this property, it would be a Dog. $100K property that rents for $800.00 a month is a Dog with a brand new $92K mortgage (Assuming 10% down)Anything, including this one is a champ with no mortgage. Just do the math.
Mike,Think outside the LL box.If you rent a million dollar property with no mortgage for $1,000 a month, is that a champ? Really?If I told you you can sell it for $1M, would you really prefer to own it and just get 0.1% a month return?Extremes highlight the example here - SELL and use the $1M somewhere else. Even a CD at 3% would beat this.
To be fair, I said if he was buying it today in new money, it was a complete dog at those numbers.
Link to post
Share on other sites

Lease Options.

First off, I'm not 100% endorsing them, but you're right in that I'm more "pro" on them than Mike or BnB is. That goes without saying for BnB - he sees the down side all the time as a property manager - only renters coming his way - so sob stories come to him.

Mike is a LL and has seen / heard it all.

Random MIGHT have found a good one, but understand that their credit most likely WILL SUCK. That is part of the deal.

Why? If they had good credit, they'd be buyers, not L/O shoppers. Simple math.

Now - find out WHY their credit sucks. If it can be repaired and/or you know what happened, then there could be a win-win. Understand one thing - the risk is mitigated by the NROC ($ up front). You wouldn't ask for this if you really had this as a rental.

You're getting 3-6 months rent up front (and a security deposit is also a good idea - remember that they aren't owners, they are leasers until they buy - so you should get $100 as a security deposit, not just for the $ sake but to establish that they are NOT the owners but leasing - establish that legal fact).

I'd also make them sign up for credit counseling. Force them into it, even offer to pay for some/all of it.

L/Os shouldn't be sold for > 24 months. 12-18 max. You want them to buy. Help them get there. Fix the credit, get them on their feet.

L/O if and when done property help everyone.

Just remember that neither side of the deal would be doing a LO if they didn't have to.

If the house would sell at the price the owner wants, he would simply sell it and be done.

If the "Buyer"/renter could actually buy, they would.

In fact, short of a very hot market, I can't see any reason why a buyer would do a LO. In a hot market where prices are climbing, it's logical that you might do anything just to get in the game before it costs another $50K in two years. Short of that, a "Buyer" with any thought about the process would work on fixing their own credit, and rent for two years. That way at the end of the two years when they can buy, they can buy any property out there in their price range, and not be locked into the one they have the LO on.

Of course, you are not dealing with the put together people who give things thought in 99.99% of these transactions.

Would I LO or Rent to own from another LL that I know where he knows me? Yes, I would if it was a good way to acquire a property I can't buy at the time and he can't sell. I did it once. I wanted to pick up a $30K Duplex where I didn't have $30K in my pocket, and the condition of the home was not good enough to get a bank to lend on the property. Put down some option money, locked it in as my property, and spent about 5 months working on it. It appraised out at $90K and I got the loan.

He owned it outright. How stupid would I have been if he had a Mortgage, I am paying him, and he didn't pay the bank. Since we were talking about 6 Months, I didn't worry about Property taxes, but his not paying them could have been another pit fall. Can you imagine socking 10s of thousands in a rehab and then losing it to the bank. Yes, I had LIMITED interest in the property, and might have been able to pay it off in time, but there would always be the Due on Sale clause to deal with. Could have lost $15-20K. I felt pretty good that nothing would go wrong in 6 months, but 2 years?

I could see doing it on a huge complex. 200 Units, seller carry the note, LO, something. Tough to buy or sell those monsters.

Would I do a Lease Option as a buyer with 10 years of RE experience under my Belt, as a Licensed Agent, limited Property management experience, owning 60 Properties? Yes, if it was the right way to go. I'm not saying take it out of your toolbox of options and dismiss it, just understand the odds are so stacked against you that it isn't even close to funny.

Just remember that neither side of the deal wouldn't even consider a LO if they had any other way to accomplish what they are trying to get out of the arrangement.

Link to post
Share on other sites

Lease Options.

First off, I'm not 100% endorsing them, but you're right in that I'm more "pro" on them than Mike or BnB is. That goes without saying for BnB - he sees the down side all the time as a property manager - only renters coming his way - so sob stories come to him.

Mike is a LL and has seen / heard it all.

Random MIGHT have found a good one, but understand that their credit most likely WILL SUCK. That is part of the deal.

Why? If they had good credit, they'd be buyers, not L/O shoppers. Simple math.

Now - find out WHY their credit sucks. If it can be repaired and/or you know what happened, then there could be a win-win. Understand one thing - the risk is mitigated by the NROC ($ up front). You wouldn't ask for this if you really had this as a rental.

You're getting 3-6 months rent up front (and a security deposit is also a good idea - remember that they aren't owners, they are leasers until they buy - so you should get $100 as a security deposit, not just for the $ sake but to establish that they are NOT the owners but leasing - establish that legal fact).

I'd also make them sign up for credit counseling. Force them into it, even offer to pay for some/all of it.

L/Os shouldn't be sold for > 24 months. 12-18 max. You want them to buy. Help them get there. Fix the credit, get them on their feet.

L/O if and when done property help everyone.

Just remember that neither side of the deal would be doing a LO if they didn't have to.

If the house would sell at the price the owner wants, he would simply sell it and be done.

If the "Buyer"/renter could actually buy, they would.

In fact, short of a very hot market, I can't see any reason why a buyer would do a LO. In a hot market where prices are climbing, it's logical that you might do anything just to get in the game before it costs another $50K in two years. Short of that, a "Buyer" with any thought about the process would work on fixing their own credit, and rent for two years. That way at the end of the two years when they can buy, they can buy any property out there in their price range, and not be locked into the one they have the LO on.

Of course, you are not dealing with the put together people who give things thought in 99.99% of these transactions.

Would I LO or Rent to own from another LL that I know where he knows me? Yes, I would if it was a good way to acquire a property I can't buy at the time and he can't sell. I did it once. I wanted to pick up a $30K Duplex where I didn't have $30K in my pocket, and the condition of the home was not good enough to get a bank to lend on the property. Put down some option money, locked it in as my property, and spent about 5 months working on it. It appraised out at $90K and I got the loan.

He owned it outright. How stupid would I have been if he had a Mortgage, I am paying him, and he didn't pay the bank. Since we were talking about 6 Months, I didn't worry about Property taxes, but his not paying them could have been another pit fall. Can you imagine socking 10s of thousands in a rehab and then losing it to the bank. Yes, I had LIMITED interest in the property, and might have been able to pay it off in time, but there would always be the Due on Sale clause to deal with. Could have lost $15-20K. I felt pretty good that nothing would go wrong in 6 months, but 2 years?

I could see doing it on a huge complex. 200 Units, seller carry the note, LO, something. Tough to buy or sell those monsters.

Would I do a Lease Option as a buyer with 10 years of RE experience under my Belt, as a Licensed Agent, limited Property management experience, owning 60 Properties? Yes, if it was the right way to go. I'm not saying take it out of your toolbox of options and dismiss it, just understand the odds are so stacked against you that it isn't even close to funny.

Just remember that neither side of the deal wouldn't even consider a LO if they had any other way to accomplish what they are trying to get out of the arrangement.

Buying with options for investors and/or commercial RE is an entirely different animal. Options are a big, important, and often smart way to go for big deals.
Link to post
Share on other sites

What's the best way to find a full list of open houses (and dates) in my area? I've tried the classifieds and the online searches but the results haven't been specific enough with the dates and times. Any advice would be greatly appreciated.

I really can't answer this. I don't do open houses. Why not hook up with a realtor you like and have them just show you homes. As a BUYER, you don't pay the Realtor anyway, it costs you nothing, and you don't have to chase open houses.As a Buyer, UNLESS you find a FiSBO that you like, you save NOTHING not using a Realtor. Might as well have the representation.
Link to post
Share on other sites

Lease Options.

First off, I'm not 100% endorsing them, but you're right in that I'm more "pro" on them than Mike or BnB is. That goes without saying for BnB - he sees the down side all the time as a property manager - only renters coming his way - so sob stories come to him.

Mike is a LL and has seen / heard it all.

Random MIGHT have found a good one, but understand that their credit most likely WILL SUCK. That is part of the deal.

Why? If they had good credit, they'd be buyers, not L/O shoppers. Simple math.

Now - find out WHY their credit sucks. If it can be repaired and/or you know what happened, then there could be a win-win. Understand one thing - the risk is mitigated by the NROC ($ up front). You wouldn't ask for this if you really had this as a rental.

You're getting 3-6 months rent up front (and a security deposit is also a good idea - remember that they aren't owners, they are leasers until they buy - so you should get $100 as a security deposit, not just for the $ sake but to establish that they are NOT the owners but leasing - establish that legal fact).

I'd also make them sign up for credit counseling. Force them into it, even offer to pay for some/all of it.

L/Os shouldn't be sold for > 24 months. 12-18 max. You want them to buy. Help them get there. Fix the credit, get them on their feet.

L/O if and when done property help everyone.

Just remember that neither side of the deal would be doing a LO if they didn't have to.

If the house would sell at the price the owner wants, he would simply sell it and be done.

If the "Buyer"/renter could actually buy, they would.

In fact, short of a very hot market, I can't see any reason why a buyer would do a LO. In a hot market where prices are climbing, it's logical that you might do anything just to get in the game before it costs another $50K in two years. Short of that, a "Buyer" with any thought about the process would work on fixing their own credit, and rent for two years. That way at the end of the two years when they can buy, they can buy any property out there in their price range, and not be locked into the one they have the LO on.

Of course, you are not dealing with the put together people who give things thought in 99.99% of these transactions.

Would I LO or Rent to own from another LL that I know where he knows me? Yes, I would if it was a good way to acquire a property I can't buy at the time and he can't sell. I did it once. I wanted to pick up a $30K Duplex where I didn't have $30K in my pocket, and the condition of the home was not good enough to get a bank to lend on the property. Put down some option money, locked it in as my property, and spent about 5 months working on it. It appraised out at $90K and I got the loan.

He owned it outright. How stupid would I have been if he had a Mortgage, I am paying him, and he didn't pay the bank. Since we were talking about 6 Months, I didn't worry about Property taxes, but his not paying them could have been another pit fall. Can you imagine socking 10s of thousands in a rehab and then losing it to the bank. Yes, I had LIMITED interest in the property, and might have been able to pay it off in time, but there would always be the Due on Sale clause to deal with. Could have lost $15-20K. I felt pretty good that nothing would go wrong in 6 months, but 2 years?

I could see doing it on a huge complex. 200 Units, seller carry the note, LO, something. Tough to buy or sell those monsters.

Would I do a Lease Option as a buyer with 10 years of RE experience under my Belt, as a Licensed Agent, limited Property management experience, owning 60 Properties? Yes, if it was the right way to go. I'm not saying take it out of your toolbox of options and dismiss it, just understand the odds are so stacked against you that it isn't even close to funny.

Just remember that neither side of the deal wouldn't even consider a LO if they had any other way to accomplish what they are trying to get out of the arrangement.

Buying with options for investors and/or commercial RE is an entirely different animal. Options are a big, important, and often smart way to go for big deals.
Jeff,

Sorry if I beat this up too much, I just really don't think the average person with no experience should ever enter into a LO.

Link to post
Share on other sites

WOW, oh WOW. Scary things going on in Baltimore when people are too stupid to figure out what they should be doing, and then start sueing everyone because they were morons. Who takes a loan knowing that they make less than the Monthly payment? Morons. Anyone can sue anyone. Glad not to be locked up in this Baltimore litigation. Mind Boggleing.

Baltimore nuckleheads suing everyone because they were "Cheated"

When foreclosure looms

Thousands in Md. who bought homes with subprime loans are delinquent in payments

By Eric Siegel

Sun reporter

Originally published March 24, 2007

Charles McCloud had never owned a home, but as he entered his late 50s he thought it was time to have the security and stability that would come from having a place of his own.

So two years ago, he bought a detached two-story house on a quiet corner in the Howard Park section of West Baltimore for $225,000, borrowing the money for the closing costs and taking out two loans, one of which had an interest rate of more than 10 percent.

A self-employed gospel pianist who had never made more than $35,000 a year, McCloud had just gone on disability for a variety of ailments, including congestive heart failure that often requires him to use oxygen. But he figured he could meet mortgage payments that were 2 1/2 times his disability check by taking in friends and relatives as boarders, and no one disabused him of the notion.

When his original four boarders shrank to two, McCloud found himself in trouble.

McCloud is one of thousands of Marylanders with subprime loans - higher-cost mortgages given to those considered credit risks or with irregular or limited incomes - who are facing, fearing or fending off foreclosure. A recent report by the Mortgage Bankers Association said that at the end of last year, one out of eight of the nearly 130,000 subprime loans in the state were delinquent.

In November, McCloud was sued for foreclosure stemming from a delinquent property tax bill. Should he manage to extricate himself from that predicament, there is still the matter of his latest monthly mortgage payment of nearly $1,500, which as of last week he had not paid.

In any case, he worries that his days as a homeowner may be numbered.

"I can't remain here," says McCloud, who is now 58. "I need to make plans to go somewhere else. I've got to keep it real."

While the situation has taken a toll on the lenders and spurred fears of harming the broader housing market and possibly the overall economy, those at greatest risk are the homeowners whose dreams are getting a rude awakening.

Like McCloud, many are black and first-time buyers, who now readily acknowledge that they did not fully understand the deals they were getting into. Some got into trouble with their original loans, others by responding to solicitations for refinancing.

An increasing number are beginning to show up at the doors of neighborhood organizations, asking for help.

"A lot of people are into a deal they shouldn't be in," says Frank Fischer, a longtime counselor at the St. Ambrose Housing Aid Center, who is working with McCloud. "The slightest thing makes them fall off the margin."

Roy Miller, homeownership coordinator with Belair-Edison Neighborhoods Inc., says 18 homeowners have scheduled appointments in the two weeks since the Northeast Baltimore community organization sent a letter to homeowners, asking them to contact the group if they thought they were running into problems with their mortgages.

"A lot of these [subprime mortgage] products have adjustable rates," he says. "People are realizing they got into a bad situation."

Some subprime borrowers are attempting to fight back.

In January, Baltimore-based Civil Justice Inc. filed suit against All State Home Mortgage Inc. on behalf of Joyce Delph, a retired Charles County woman. The suit, in Montgomery County Circuit Court, charges that Delph was deceptively induced to refinance her 4.83 percent home mortgage and improperly charged fees of nearly $12,000 - charges the Ohio-based company denies in court papers.

The suit seeks reimbursement of the fees plus the increased interest Delph will have to pay over the life of loan. The loan has provisions that allow the interest rate to go to nearly 10 percent, according to Phillip Robinson, Civil Justice's executive director.

"It's prime and subprime borrowers who are being put into subprime loans for the sole purpose of having lenders and brokers make huge profits," Robinson says.

Another suit, filed in September in U.S. District Court in Greenbelt, was dismissed Wednesday.

That suit charged several subprime lenders with fraud and misrepresentation in inducing a half-dozen African-American homeowners to enter into agreements knowing they "would never be able to make expected monthly payments." In dismissing the action, U.S. District Judge Alexander Williams Jr. said the complaint was "completely devoid of any coherent allegations of fact and contains mere conclusory allegations of breach of contract, unjust enrichment and statutory violations."

Williams threw out the complaints of all but the lead plaintiffs, denying a motion to stay pending foreclosure actions against them but giving them 10 days to file a new complaint.

Efforts to reach the lawyer for the plaintiffs, Walter L. Blair, and the attorney for California-based lender IndyMac Bank about the decision were unsuccessful.

But plaintiff Tanya Jones says she intends to refile, declaring, "I'm going to take this as far as the court system will allow me to."

Jones and her sister Donna Jones are both postal workers who originally filed the suit on their own. They took out a $520,000 loan from IndyMac in the fall of 2005 on a home in Brandywine in southern Prince George's County. The loan had an initial interest rate of 1 percent and an initial monthy payment of $1,673 - but an adjustable rate provision allowed the rate to rise almost immediately, with a limit of just under 10 percent.

Tanya Jones says she didn't realize at first that her monthly payments would more than double within a couple of years.

"I make $4,000 a month before taxes," says Jones, 48. "I can't afford $4,000 a month [in mortgage payments] and still survive."

Tanya Jones says she and her sister are about $20,000 behind in their payments. "If I lose this house, I don't know what I'll do," she said. "I'm trying every way I can not to lose it."

For Giacomina Maerten, the way out of losing her home to foreclosure came through friends of her parents, who lent her more than $8,000 to make delinquent payments and penalties, allowing for the dismissal this month of a foreclosure action filed in February on behalf of California-based Countrywide Home Loans.

Maerten, a 24-year-old mother of three children - ages 6, 1 1/2 and 2 months - bought a rowhouse in the Idlewood section of Northeast Baltimore in the summer of 2005 for $150,000.

Like McCloud, Maerten got a so-called "80/20 loan." In her case, the loan included a first mortgage covering 80 percent of the purchase price at a little over 7 1/2 percent interest, but with an adjustable-rate rider that could push the interest to nearly twice that amount, and a second mortgage for the remaining 20 percent at nearly 13 percent interest.

She said she didn't know that her payments would be nearly $1,300 a month until she sat down to sign the loan documents. And though they were $300 higher than she had anticipated, she says, "I didn't know if I had the right to get up and walk out."

Still, she hoped to be able to make the payments. But when her husband's work as a freelance videographer fell off, and she had to cut back her hours as a waitress while pregnant with her third child, they fell more than $4,000 behind on their first mortgage payments.

"We were naive," she says. "We went into it not knowing what everything meant."

Wary of having history repeat itself, Maerten is putting her house up for sale. If she gets her list price of $179,000, she'll have enough to pay off her initial $11,000 closing costs, the loan from her parents' friends and other expenses.

But the effects linger.

"Our credit is shot," she says. "It stinks that we had to go through this."

Another Northeast Baltimore woman, Dawn Tucker, is also looking to sell her house - not because of her original mortgage but because of her decision to refinance.

A single mother of two, Tucker bought a detached, two-story house in Gardenville six years ago for $89,000. Hoping to pay off some debts, she refinanced in 2005 - not fully grasping that loan fees would shrink the amount of money she would receive while the higher interest rate and greater principal would raise her monthly payments by more than $300.

"I thought it would be a little higher and I would only have one bill," she says. "I just dug myself in a hole."

Compounding her problem was that she was promoted in an administrative position that didn't work out, then left her steady job to start a cleaning business.

As of last week, she had not made her March mortgage payment. "It's always going to be a struggle," she says. "I really want to sell."

Tucker figures she needs to get about $150,000 for her house to break even. Houses in the neighborhood have recently sold for well above that, she says, but she's cautious about her prospects.

"Because it's a buyer's market, who knows what I'm going to get?" she says. "I'll probably take what I can get so I don't have to face foreclosure."

Earlier this month, Derek Jones refinanced the rowhouse he bought in Belair-Edison two years ago, to settle bills that included the balance on his 2002 Ford Explorer and unpaid income taxes. The 36-year-old truck driver says he hesitated when he found out at settlement that the interest rate on his loan would be more than 9 percent, with adjustable-rate provisions that could take the loan as high as 15 percent. But he signed the documents and didn't act quickly enough to cancel the loan.

On May 1, he has to make his first payment on the new loan of $953 - an amount that is nearly half his monthly pay. He says he'll be able to pay that bill but says, "After that, I don't know."

"I'm hoping to refinance again," he says. "I can see in the long run, this is not going to be beneficial."

Across town, McCloud is less optimistic about the future.

A self-described "saver" who uses food stamps and Meals on Wheels, McCloud says, "In the evenings, I take all the change in my pocket and put it in a jar."

He also plays an occasional gospel gig to make extra money, but it's not enough. He is hoping to borrow money from a niece to meet this month's mortgage payment. But then there is the next month, and the month after that. Not to mention the broken front steps that need to be fixed, and the shingles that were blown off the roof by a recent wind.

He now acknowledges that buying the house was a mistake - "I blame myself for that" - but says, "Somebody should have explained things to me in detail."

Instead, he says, he was advised by his brokers to pay his taxes and insurance himself rather than put the money into escrow to keep his payments down. That helped lead to his delinquent tax bill, since paid, and the purchase of the tax sale certificate and current foreclosure.

At one point, McCloud hoped to have two sisters who live in Virginia and had never seen his house come up this summer for a barbecue. Now, he worries that the dream, like his dream of homeownership, may evaporate.

"I'm gonna try and work out a plan to sell the house and pay off my debts," he says. "The stress right now is doing more damage than anything."

--------------------------------------------------------------------------------

Options for help

For homeowners facing foreclosure, struggling to make mortgage payments or having questions about their loans, here are some places to call for help:

The Homeownership Preservation Foundation, a Minneapolis-based nonprofit, maintains a 24-hour hotline at 888-995-4673. Baltimore residents can access the hotline by dialing 311.

The Maryland Department of Labor, Licensing and Regulation has two numbers to take complaints about loans: 1-888-784-0136 and 410-230-6100.

Several neighborhood organizations offer counseling services. Among them are Neighborhood Housing Services, which serves Baltimore and Baltimore County, 410-327-1200; St. Ambrose Housing Aid Center, 410-366-8550; and Belair-Edison Neighborhoods Inc., 410-485-8422.

Link to post
Share on other sites

Had a couple of showings over the weekend for the Lease Option.

First one was a guy called me late in the afternoon Friday while I was at work and wanted to see the house. I met him up there on my way home and he absolutely loved it and wanted to fill out a rental app, but my unprepared ### didn't have one yet. :angry: Told him I'd get one and give him a call so he could fill it out.

I explained to him how the L/O works and he told me he was cool with it and needed a little time to repair his credit before trying to buy a house. He currently pays $700/mo but his LL is in foreclosure on his current rental. Meeting him tonight at the house again with the lease app.

Had the other showing yesterday am (the one mentioned earlier, woman on maternity leave) and they (her, husband wif one toof, two rugrats running all over the house, and one in the oven) were a complete waste of time. I showed the house for about a half an hour. When they were getting ready to leave I asked if she wanted to fill out the rental app, she said "no, I just wanted to show my husband this house". :hot: Ok, well have a nice day. During the showing she kept telling me about the people what lost the house to HUD, they were friends. Guess that kind of stuff is to be expected.

Late last night she calls back!

her "Hi Random, this is soandso do you remember me?"

me "Yes, what do you need?"

her "I was just wondering if I could see the house again"

me "no, you already looked at it, why do you want to see it again"

Long story short, after talking it over they decided they wanted to fill out a rental app. I basically told her it wasn't going to work for her and hung up the phone.

Definately had some interisting phone conversations over the last four days. Probably close to 50 calls asking about it. Some hung up on me when I told them the rent ($1100 is really high for here), some hung up when I told them the L/O cost, most just said I'll think about it and get back wit cha.

I'll keep you guys posted on what turns up on the credit app I'm getting tonight.

Link to post
Share on other sites

Long story short, after talking it over they decided they wanted to fill out a rental app. I basically told her it wasn't going to work for her and hung up the phone.

Wow...I hope they're not a member of a protected class, otherwise you just opened yourself up to a huge lawsuit.
Link to post
Share on other sites

Long story short, after talking it over they decided they wanted to fill out a rental app. I basically told her it wasn't going to work for her and hung up the phone.

Wow...I hope they're not a member of a protected class, otherwise you just opened yourself up to a huge lawsuit.
Even if she was offered one 8 hours earlier?

When they were getting ready to leave I asked if she wanted to fill out the rental app

Edited by Random
Link to post
Share on other sites

Long story short, after talking it over they decided they wanted to fill out a rental app. I basically told her it wasn't going to work for her and hung up the phone.

Wow...I hope they're not a member of a protected class, otherwise you just opened yourself up to a huge lawsuit.
Even if she was offered one 8 hours earlier?

When they were getting ready to leave I asked if she wanted to fill out the rental app

At this point, your best option is to give an App to everyone who wants one. No chance to get into trouble. As the Owner who is not in the business doing a FiSBO for all practical purposes, you are allowed to discriminate on a number of things.HOWEVER, given that a RE agent is involved in the deal as a whole, and you are listed in the MLS, I wouldn't risk anything, you may have no protection because of that. And even though a for sale by owner can under some conditions CAN discriminate (Which I believe you qualify for given the info you've posted as we go along) do you really want to have to defend yourself in court even if you are in the right? The Government picks up the cost on the other side, you pay to defend yourself.Long and short here, NEVER take the chance, take an App from everyone.The reason they want to turn in an app now is that their current LL won't continue work with them, and they need a place, any place to stay soon. It might be 3 months of living before you can get them out. Expect that they are going to need you to work with the down.You ARE collecting $25-35.00 an adult with the Apps, Right? First, it costs you to run credit, you shouldn't be paying for all the worthless apps that people try and push through. Secondly, you will get rid of the tire kickers if they know it will cost them $50.00 just to get turned down. Always call the App money a "Fee"So...... How is that eye opening experience with LO working out so far? Pretty amazing, Huh?
Link to post
Share on other sites

Getting an Appraisal today to refinance a Property. Tenant has a Dog that I didn't want, but I let them have after going round and round for a while. Basically, against my better Judgment I ended up saying yes.

The Tenant has been with me for over 4 years, Paid late twice I think, generally pays early. Really are no stress to me, they don't have problems.

So the Dog is chained in the back yard and barking. We walk out to the Garage, I walk right past the dog like I have done a number of times. Tell the Appraiser (Who I have NEVER worked with before) not to worry about it. He walked towards the garage, and the dog came up behind him and bit his leg.

Honestly still in shock.

Link to post
Share on other sites

Getting an Appraisal today to refinance a Property. Tenant has a Dog that I didn't want, but I let them have after going round and round for a while. Basically, against my better Judgment I ended up saying yes. The Tenant has been with me for over 4 years, Paid late twice I think, generally pays early. Really are no stress to me, they don't have problems.So the Dog is chained in the back yard and barking. We walk out to the Garage, I walk right past the dog like I have done a number of times. Tell the Appraiser (Who I have NEVER worked with before) not to worry about it. He walked towards the garage, and the dog came up behind him and bit his leg.Honestly still in shock.

Ouch! I guess you know how that appraisal is going to go. That bites. hehehe.
Link to post
Share on other sites

You ARE collecting $25-35.00 an adult with the Apps, Right? First, it costs you to run credit, you shouldn't be paying for all the worthless apps that people try and push through. Secondly, you will get rid of the tire kickers if they know it will cost them $50.00 just to get turned down. Always call the App money a "Fee"So...... How is that eye opening experience with LO working out so far? Pretty amazing, Huh?

To answer your first question, I haven't even given out an app yet (offered to everyone that has looked at the house, but noone has taken). I also can have a friend run credit for me at work, so I'm not really out anything. I suppose I could still collect a fee for it though.As far as the experience goes, I honestly am #1 amazed at the number of people calling about this. I know I could have cut the number of calls down significantly if I had put a price in the ad, but I kinda wanted to see what kind of demand there was for this out there. I'm truely floored at the interest.Had a few more phone calls yesterday that expressed significant interest. The first from a woman living in a hotel because her husband just started a new job in town and they moved from 100 miles away. She says its a supervisor position with a company I know the plant manager of (will be an easy check if they decide to rent/buy.) She said they want in asap, so I told her to drive by the place and if they're interested I will show them the place today. She also told me her husband makes 50k/yr in his new position so I told her they should be able to get financed to purchase. If so they could skip the whole L/O, make me an offer, and rent until we get the deal closed. I should hear back from her today.Also yesterday, I was supposed to meet the first guy I showed the place to (the one that wanted the app, but I didn't have one yet) at the house after work to give him an app. On the way there I got a call from someone else wanting to see the place. I told him I was on my way there and could show it now if he wanted. He was there when I showed up. Showed him and his wife around and they obviously fell in love with the place. He said he was going to go look over his finances and possibly get ahold of me with an offer. He is retired military and said he thought he could get a VA loan for the purchase, but it may take a few months, so he would want to rent until that was set up.Overall, not getting my hopes up but I think I have done more work to sell this place in the last four days than my agent has in the last five months. She still hasn't had a phonecall about it. Edited by Random
Link to post
Share on other sites

I also can have a friend run credit for me at work, so I'm not really out anything. I suppose I could still collect a fee for it though.

Just curious (question to all), how do people get away with this? We have to keep an application on file in case of an audit by the credit reporting agencies and are now required to destory all social numbers and paper copies of the credit reports. I thought due to the identity theft issues the credit agencies were cracking down on this process?
Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Recently Browsing   0 members

    No registered users viewing this page.


×
×
  • Create New...