This is the only property I purchased on LO; I leased a TH form seller at $1700/m and put a Lease-Option buyer in it for $3000 down and $1450/m (prop had some equity). It has been a nightmare! The buyers have been bad on payments but I always paid the seller ($1700/m) on time. The buyers are over $9000 behind and I finally filed eviction (atr will goto court 10/4); I was trying to work with them on payment plans etc.
Since I was late (due by 15th) sending the check at times (but always send before 30th) the seller filed a complaint at the BBB ! He has always been threatening with legal action. I could only send him $800 for Sep (paying all this money from my pocket,borrowing from cc etc).
I will try to get another LO buyer as soon the the home is vacant this week.
Realistically what legal action can he take?
Now, I cannot pay him on a vacant home.
Seller send me this email:
I’m just stating what options we have to consider. What you don’t understand is I don’t care about what you have to do personally to get our money. Just get it… That’s your problem. please stop putting your personal issues on me because we have our own problems.
What you fail to understand is that we are your customers, you are a business and you have responsibilities in your business.
I’m sorry that I don’t have much compassion for how much work you’ve done to get money but what do you think we’ve had to do? And you should understand and accept that and stop defending yourself. YOU HAVE NO DEFENSE. Please stop already with acting like you’re doing me a favor by paying me what you owe. You are only doing what you are suppose to be doing. Again, sorry you have to pay money out of your pocket but you took the risk with the renter.
Sorry to say I agree with the seller! You agreed to pay the payment, no matter what the situation, or why else would they lease option you their home? You should have evicted the tenant sooner. Im not sure of the exact re-course the seller has other than suing you for specific performance it all depends on your contract with the seller Im sure. If you do these types of transactions you must have enough funds in reserve to cover such issues. Every course on Real Estate investing Ive ever read or listened to stresses that if you tell someone you will do something, DO IT! It is bad business practice to promise the owner you will cover their payments and then leave them hanging and not knowing what to do. This is what gives investors a bad name!
What?? Why in God’s name would you rent to someone else for LESS than you’re paying?? I am truly baffled by this. Also, why did you only get 3k down for a house that is worth about 300k (based on the monthly payment). You should have gotten about 9k down based on a 300k sales price and that would have covered you for at least 6 months just in case something like this happened.
You should start marketing for another L/O buyer ASAP. Don’t wait until these other losers are out.
Chalk this one up as a learning experience.
- Always get at least 3-5% down.
- NEVER rent for LESS than you are paying.
Good luck with this situation.
The has been breathing down my neck from month1,day1 while my payments were due to him by 15th. And I HAVE been paying him from my pocket in spite of him complaining to the BBB and threatening legal action; I was late sometimes (paid after 15th). I can only go so far and am already over $9000 in hole. Other investors I talked to said they would have returned the home to seller long time ago. I did ask him to work with me to resolve this situation but his attitude can be seen from the above email. I have borrowed money just to pay him and I cannot do this for ever.
Once the home is vacated shall I get a new LO buyer and complete my 2 year LO term with seller or just hand over the tenant to him and part away?
Did you sign a 24-month l/o or a 12-month l/o renewable for 1 term for a total of 24 months? How much longer do you have?
You seem to be completely oblivious to the homeowner’s predicament. Live up to your responsibilities and obligations, or don’t do this type of deal.
Next time, make sure you get a month or two to find a l/o buyer before your first payment is due. When you get under pressure is when you do unwise stuff. Also… next time, put in a “liquidated damages” clause in your lease so that if you give him $10 as a deposit and say make 1 payment but can’t find a good buyer… you can walk with only losing a little. And to reiterate… it’s better to have a vacant house than to put anyone in with less than a 3% deposit. Do a credit check and criminal background search also. If they have a bunch of evictions or foreclosures beware.
If a seller won’t agree to that… they aren’t that motivated, find someone else.
As to the present problem… if you break your lease and you didn’t have a no risk default clause in the lease… they could get a judgment on you. After you evict them… and you can’t find someone who will give you a 3% nonrefundable deposit, don’t do it! I would rather walk and let him potentially get a judgment if he wants to. Good luck collecting it. lol
Don’t be discouraged… almost all real estate gurus have had bad experiences like this… but they just let it make them stronger. “I’ve made every mistake… eventually I ran out of mistakes to make.” Ron LeGrand
Hate to be redundant but next time, if you are that adventurous, get a “non-refundable” load of cash upfront and for everybody’s sake charge enough rent to create a positive cash flow.
Best advise I can give is don’t even think of doing another deal unless you know what you are doing, have a business plan for going into a deal and one or more exit strategies!
I’m a newbie and even I know that!