Posted by Jim FL on May 08, 2003 at 23:36:50:
Ben,
How the option money applies when the T/B’er gets a loan is up the lender who is funding the deal.
Some will use option money toward down payment, and others will just reduce the purchase price by that amount.
Each one has their own way of handling it.
Either way, the end result is that the T/B’ers get credit for the option money somehow at closing.
HTH,
Jim FL
Unbelievable L/O-I’m shocked - Posted by Dan-Fl
Posted by Dan-Fl on May 08, 2003 at 16:08:33:
On most of my rentals I L/O and find this works great for me.I get a higher rent,option fee and they take better care of my properties and very seldom exercise there option.In the past when I got a property back in was in fair condition.So this caught me by suprise. One of My L/O tenant of 5 years called last month to tell me they were moving,because when they moved in they had 2 kids and it was a 2 bedroom and now she has had 3 more kids since then.So they needed a bigger house.I never heard a word from these people in 5 years and they were always on time with there above average rent.So they moved out wed and today I went by to take a look at the place,I was in shock.
He rehabed the bathroom,everything,walls floor,tub,sink-It looks great.It did’nt stop there-kitchen all redone,real tile floors cabinets,walls tiled-living room all real tile.He turned the garage into a master bedroom with walk in closets that have revolving space inside for clothes and for your shoes.If I would had to pay to have all this done it would of cost about 10k.It was a 2 bedroom before and now it is a 3 bedroom and there is a great demand for 3 bedrooms here.When he moved in years ago he said he works for a builder,but I never thought this would happen.Made my day.
Kind of makes up for those others-you know them NT - Posted by BrokerScott (Mich)
Posted by BrokerScott (Mich) on May 09, 2003 at 08:32:18:
nt
Re: Unbelievable L/O-I’m shocked - Posted by Heather - OH
Posted by Heather - OH on May 08, 2003 at 22:25:32:
If they were THAT good…how come you aren’t shopping for a new house to purchase and lease option to them?
Re: Unbelievable L/O-I’m shocked - Posted by Tim Fierro (Tacoma, WA)
Posted by Tim Fierro (Tacoma, WA) on May 08, 2003 at 20:06:18:
This hasn’t been brought up, but depending on the amount of work actually done to convert that garage into a master bedroom; what about permits? Obviously by keeping quite, this was all done quietly.
Re: Unbelievable L/O-I’m shocked - Posted by Kristine-CA
Posted by Kristine-CA on May 08, 2003 at 19:13:29:
Dan: Have you considered returning at least half of their option deposit money ala John Schuab? They invested money in your home, increased it’s value (and sq. ft!). I’m one of those rental tenants that remodels. I never expect anything as I am a renter. But it seems to me you got a good deal because your t/bs really treated your house like a home. If they were more real estate savvy they would have sold their option or found a partner instead of just walking away.
They were good partners in the deal for five years. Please consider making their day by refunding their option money or giving them something for the materials they invested in your house. Sincerely, Kristine
Re: Unbelievable L/O-I’m shocked - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on May 08, 2003 at 17:44:39:
Dan–(FL)-----------
They were very nice to you. Left the place looking good, that’s valuable to you.
Now, were I in your place, I’d send them a $2,000 check. I’d label it “return of security deposit and leaving property in better shape than when moved in.”
They can probably use it, and still, you’re getting a bargain price on the work.
Good InvestingRon Starr*****
Re: Unbelievable L/O-I’m shocked - Posted by Ben (NJ)
Posted by Ben (NJ) on May 08, 2003 at 16:44:18:
Nice! I am considering an L/O right now. If market rent were $2000, how much of a premium would you charge? How much of an option fee? Do you do the lease and option agreement completely separate (ala JPiper)?
nice one! - Posted by matt
Posted by matt on May 08, 2003 at 16:24:58:
Now, just tell us all how to get 20 more
like him LOL!
Good for you!
Matt
Re: Unbelievable L/O-I’m shocked - Posted by Dan-fl
Posted by Dan-fl on May 08, 2003 at 19:43:07:
Ya I have been planning on giving them some money back.I’m trying to find out where they went,they left no number or address of where they were moving to.I’m going to talk to the neighbors this weekend and see if they know…The funny thing is they never said a word about all the work they had done.They were very nice when they called to say they were leaving and ask if they could use me as a reference.
Re: Unbelievable L/O-I’m shocked - Posted by rhunter
Posted by rhunter on May 08, 2003 at 18:57:01:
Ron,
BRAVO. I enjoy reading your post more and more each day. I hope Dan takes your advice.
Re: Unbelievable L/O-I’m shocked - Posted by David Krulac
Posted by David Krulac on May 08, 2003 at 17:37:23:
as much as the market will bear.( I’d probably accept $200 extra. But I wouldn’t give more than $200 rent credit toward principle.)
ditto (I’d like to get as much as possible but usually in the 3-5%, if they have more I’ll take it, but if they have 5- 10% they usually can get their own financing.)
yes (I like that they are two independent agreements. I’ve never had this problem but have heard that some l/o when leaving claim ownership and require foreclosure to extinguish.)
Bravo for you … - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on May 08, 2003 at 23:32:42:
Dan–(FL)-------------
Good for you.
Try sending a first class letter to them at the address with the notation on the front: “Forewarding Address Requested.” That might get results.
Good Investing*Ron Starr
Actually… - Posted by Ben (NJ)
Posted by Ben (NJ) on May 08, 2003 at 20:46:30:
the separate document idea was more to preclude the IRS from deeming the l/o a constructive sale (within the first year of ownership), thereby incurring short term cap gains tax. Also,is the option money applied toward the purchase when the option is exercised?