Re: How to get 3 times the market rent - Posted by Mark (SDCA)
Posted by Mark (SDCA) on August 03, 2005 at 09:09:50:
The law states that it’s your responsibility to fix problems which relate to habitabilty. NNN leases are more typically used in commercial leases (where no one actually LIVES at the property).
If there is a hole in the roof or raw sewage running through the yard or none of the appliances work and you go before a judge and tell him, “It’s the tenant’s fault. They are responsible for ALL repairs and maintenance at this property…” Well, I don’t like your chances very much.
Re: risky in the residential market… - Posted by Scott (UT)
Posted by Scott (UT) on August 03, 2005 at 09:10:21:
Other than utilities the Tax and Ins. is impounded in the monthly payment. The tenant also must put 2 to 3 months of payments in escrow in the event of a late or non-payment. As a straight net lease from the trust the tenant can be simply evicted on their own money within 30 to 45 days.
If the utilities are not paid then the tenant has no water. Would you stay in a house with no water etc. I don’t think so. The Escrow Fund is used in that case to bring utilities current and replace the current tenant. Oh, and BTW, as a beneficiary of the Trust this is what they pay for and agree to prior to occupancy.
Like I said, I and hundreds of others have been doing it for years. Personally I have only had to file for eviction twice (for the same person). After reviewing our documents the tenants attorney told the tenant to pay up or get out.
This works 100% of the time in all markets regardless of seller or buyer market.
Re: How to get 3 times the market rent - Posted by Scott (UT)
Posted by Scott (UT) on August 03, 2005 at 20:59:34:
No Offense but you need to get outside the box your in and explore a little. We’re talking two entirely different things here. I know, I was in the same box.
A Title Holding Land Trust, coupled with a Beneficiary and Net Lease Agreement is in no way anything like using a NNN Lease on it’s own or in conjuction with an Option to Purchase.
Again in a marginal market this is risky business. Tenants run up thousands of dollars in water bills and they are not shut off… and then are liened for the owner to deal with.
You are unfamiliar with certain aspects of utilities if you think they shut off low end tenants in many areas of the country for non payment. I have seen tenants run up multiple thousand dollar gas bills and water bills as well unpaid during years at properties.
I’m glad its working for you, but you don’t know what you are talking about if you think it works everywhere.
Re: risky in the residential market… - Posted by Mark (SDCA)
Posted by Mark (SDCA) on August 03, 2005 at 09:21:53:
Either your rent is SUPER low or your rental market is the tightest anywhere in the country or you have vacancies as far as the eye can see (or are you these LO/Equity shares where you are giving the tenant a piece of the property).
What tenant can come up with FOUR rental payments up front (plus security deposit?)
Re: risky in the residential market… - Posted by Scott (UT)
Posted by Scott (UT) on August 03, 2005 at 20:04:34:
The only place it works a little different is Louisiana and Tenesssee. Something to do the equitable conversion. Other than that Federal Law allows it anywhere.
I understand what you’re saying regarding the utilities. When I was a Landlord years ago I had happen what you discribed. However, I am now notified of late or non payment on utilities that remain in the seller/owners name such as the water. If the payments aren’t made it is grounds for eviction. I’ve never ever had a resident not pay their water bill. If that is all your worried about is a water bill then put more money in escrow to cover such an occurance and forget about it. It’s their money.
Re: risky in the residential market… - Posted by Scott (UT)
Posted by Scott (UT) on August 03, 2005 at 20:38:15:
Every benefit of Fee Simple Real Estate. Where can you go “Lease” instead of purchase and receive tax benefits, appreciation, note reduction, pride of ownership, etc?
Re: risky in the residential market… - Posted by Don (VA)
Posted by Don (VA) on August 03, 2005 at 18:14:44:
The advantage is that, if the tenant assumes the obligations of ownership (payment of mortgage, utilities, maintenance, repairs, etc.), he/she can be entitled to the tax and interest write-offs that otherwise the owner would be. So, rather than the tenant simply paying, say, $1,000 a month in rent, he pays $1,300 but is entitled to $400 a month in deductions for taxes, insurance, etc. He pays more in “rent” but, after deductions, ends up with less out-of-pocket. As is noted in another post, it’s typically used in a land trust arrangement–can be the equivalent of a lease-option or simply a tax lease.
I’m not saying you can’t do it, I said ITS VERY RISKY in the residential market.
Not to mention as someone else pointed out, if you are not in a hot market, you’ll see your properties sit.
In terms of being notified of NON Payment on utilities… Again, you are mistaken. Perhaps where you live they will tell you, but even if you are the owner, they will NOT tell you the outstanding balances, whether they are paid, etc etc on accounts in tenants names due to privacy laws and considerations in many places. Even though YOU own the properties, the accounts are not in YOUR name, and you cannot get the info without permission of the tenant. You could get permission when you sign the lease, still its not in most areas like its working for you.
Your money in ESCROW is exactly the kind of reason your idea won’t fly in but the hotest markets… folks aren’t going to give you thousands of dollars for escrow… in a higher dollar market you might expect a renter to show up with 5k willing to put it in, but in a marginal area (IE MOST OF THE COUNTRY) you will watch that unit stay vacant until you are old and grey.
Re: risky in the residential market… - Posted by Scott (UT)
Posted by Scott (UT) on August 03, 2005 at 20:44:04:
Thanks Don, well said.
Just something to chew on here. Renting a home for someone making $40,000 per year for $1000 per month is the same as a $1500 per month mortgage payment after tax benefits.
Quit often a Lessee will actually experience an increase in their weekly or monthly paycheck (if adjusted correctly), as a result of additional tax savings. I always refer them to their own CPA or Tax Advisor to make the calculations. I don’t want to offer any tax advice or promise something to someone who may not benefit from such a program.
Re: risky in the residential market… - Posted by Scott (UT)
Posted by Scott (UT) on August 03, 2005 at 20:50:54:
You said it not me. Every time I do, my posts are deleted from the board. No Mystery here.
Thousands of Bills students, if you will, know me well. I owe my life to Bill Gatten and his system of documentation. I’ve bought them all and I’ve never found any that compared or were supported as well. I now do deals all over the country including places where I’ve been told it can’t be done.