Posted by David Krulac on February 14, 2002 at 18:35:59:
landlord/lady burn out faster than anything else. you either have to get t/b with the right attitude going in or you have to be convincing enough to change their attitude. If they are of a mind not to change, then you’re going to have problems.
reminds me of that old Paul Neuman movie “Cool Hand Luke”. “What we have here is a failure to communicate.” If you have a failure to communicate with your t/b its almost a guarentee of trouble to come.
Lease-Option and Renter Mentality - Posted by Kristine-CA
Posted by Kristine-CA on February 14, 2002 at 11:13:26:
Greetings. For all of you who offer lease/options I have a question. Do your tenant/buyers rise to the occasion and behave like owners, or are you still essentially a landlord? I’m a little concerned about this because of the area I am working and the experience of the people who would be prospective t/b’s. The rental market is tight, so these people will come up with the the down for a lease/option and make payments but I am afraid of their lack of experience taking care of taxes, maintainence, etc. on their own.
What’s it like for you? Is it just a matter of good screening?
Thanks for your thoughts on this. Sincerely, Kristine
Posted by Kristine-CA on February 15, 2002 at 10:51:58:
for all the insight. I think my concerns really stem from the fact that I don’t want to be a landlord and l/o opportunties and other cash-flow possibilities keep showing up. Maybe I’m just trying to talk myself into getting over the fact that some of my original exit plans aren’t presenting themselves. But deals are around and people are calling. So I need to rise to the occasion.
Re: Lease-Option and Renter Mentality - Posted by Carey_PA
Posted by Carey_PA on February 15, 2002 at 08:34:58:
Kristine,
YOu got some good responses to your question, but I’m gonna comment on something else.
I do NOT have my tenant/buyers pay the taxes and insurance (well technically they are, because I’ve figured out their rent, etc. properly) but I would never have the insurance or tax bill sent to them, because heck they may NOT pay it.
Also, water bills and sewer bills I get sent directly to me and I bill the tenants for it. (I don’t want them getting water and sewer bills for a year and not paying them
Just a couple of things I do, personally. Now I am no expert, by far, but have learned a few things from others mistakes.
P.S. My tenant/buyer that I have now is 50 yrs. old and swears he wants to own, but he hasn’t done 2 simple things that I’ve asked him to do thus far to help him become a home owner instead of a rentere. (I told him to pay me from his OWN checking account every month. Turns out he didn’t have a checking account and he STILL has not opened one. I also asked him to get me his VA cert asap…still no va cert…do I have a feeling he’s just going to be renting
Re: Lease-Option and Renter Mentality - Posted by Brent_IL
Posted by Brent_IL on February 14, 2002 at 16:04:26:
You might want to over-qualify the L/Oer on income, and look for people who are moving from rental houses.
Here?s an area that is usually overlooked until we need to find a second L/O candidate.
People who have lived in an apartment for a long time handle repairs by calling the landlord. Maintenance isn’t considered.
When we moved from an apartment into a house we didn’t own a shovel, rake, or snow blower. Our tool kit had one screwdriver, and a hammer.
We moved in at Christmas time and had to buy a snow blower the first week. The first summer, our average spending at the local Ace Hardware and Garden Center was $300.00 a week simply to get up to speed.
Based on my experience, if I have any involvement or responsibility after the sale, I make ownership of basic home repair and maintenance tools a condition of sale.
Some times I’ll wind up taking less as a deposit, and we all go shopping at Home Depot or Menard’s. I do this because if their income is used for big-ticket tools, something will give. It may be the payment on their regular bills that will hurt when they try to exercise their option. It may be the rent payment (gasp). Most likely, small repairs will become big ones.
Repairs and maintenance may be the L/Oers contractual responsibility, but it is in your best interests to make sure they have the tools and the understanding they need to do the job. They can walk, but it?s your house.
Posted by David Krulac on February 14, 2002 at 15:59:20:
some people have a renters mentality no matter what. Maybe it how/where you were raised. If you lived in rent your entire life you’re going to think like a renter. I do have a couple of examples:
a t/b has owned his home for the last 20 years is now a t/b with me. so far so good haven’t heard from him and the payment is always on time.
this is not a l/o but I sold a house zero down, where I gave the buyer a deed and a first mortgage on the property. They have been paying a “mortgage payment” on this house for 5 years. They still call it rent and often times their check has the memo written on it Feb, rent. They don’t call me for problems either as I’m just the bank.
I have another l/o in which I haven’t seen or heard from the t/b in about 5 years, since we settled.
I still have the deed, and I expect not to hear from him until he wants the deed.
I had another l/o that rented from me for 5 years with a written lease and a verbal option. They never called me either until they wanted to get the deed and we worked out the terms and they bought. They had been home owners before but because of a BK couldn’t buy when they stared to rent from me.
One factor seems to be what is their personal history? Have they ever owned a house before? If not they may not know what home owners are supposed to do. If that’s the case then you need to do some education before you do some l/oing.
Kristine
Start by getting a good non-refundable down payment with the l/0.Minimum 5% to 6% down on an $80,000 and up home.
Collect your rent as if you have a regular tenant. Do not tolerate late payments. You should have a clause in your l/0 to have the right to visit the home at any time with a 24 to 48 hour notice. If they are not keeping the house in at least the condition you rented they should be in violation of your l/0 agreement.Do not under any circumstance let the t/b be responsible for paying your taxes and insurance on the home. That is your reponsibility and the only way to know that they are paid on time and that your home is insured.
Rent should cover PITI and some cash flow.If you allow them to pay the taxes I will guarantee that they will not get paid on time and they will eat up the downpayment they gave you by not paying the taxes. NO WAY!! lol
Posted by Kristine-CA on February 14, 2002 at 16:53:28:
David: thanks for your good ideas and experience on this. I think you are probably right about t/b experience. And attitude in general. I’m a little nervous because the area I’m working has lots of high-maintanence tenants. Thanks again. Sincerely, Kristine
