I’m a firefighter in Virginia Beach, Va. with only one investment property in Virginia and need some help since I don’t know a lot of the ins and outs of real estate.
Without going into all the detail and reasons why, I signed the papers for a former friend/former employer to buy a house in Cypress (suburb of Houston). The title is solely in my name and I’m legally responsible for making all payments. He’s living there with his wife/children/mother-in-law and is making rent payments equal to the mortgage payment, but not including the taxes due (just received a $7k tax bill which I can cover but obviously he can’t). He moved in with the intention of being able to purchase the house after a year, and then I could have walked away unscathed.
After reading a lot of posts here I’ve come to the conclusion that the best way out of this mess - just to be able to get my money back since houses aren’t selling now - is to lease option the house, but obviously not to him. I know that technically lease options are illegal in Texas but some here seem to have found lawyers who can actually get it done with the proper contracts.
2 questions:
How should I structure this? House is 3500sf, new development, and cost $235k a year ago when it was new. Tax assessment is the same. I assume this would also be close to what the appraised value would come in at now. I’m not sure how much to charge for the option fee, monthly rent, how much of the rent to allow towards the down payment. My monthly payment is high for the loan amount, $xxx per month.
About getting the current “tenant” out of the house, there is no signed lease - it’s strictly an oral agreement. Do I have to evict him just as I would another tenant? Can somebody tell me what this would cost to hire a lawyer to have it done for me in Houston?
Houses are still selling in Texas, and the higher the price of the house the better the market is. This of course varies by location as well.
First step is to contact a realtor in houston and get a CMA on the home and average days on market. Don’t guess, figure it out. If you can sell it, then go for it. Not sure how many tenants would be willing to pay $2k+ per month in houston. I know I would have a challenge in San Antonio (but never attempted it).
As far as getting him out, did you talk to him? what was the original oral agreement? you could probably evict him but you have to give him 30 days notice or so.
I have a lawyer in houston that does my closings. He did a foreclosure for me in San Antonio for $1400. I can’t imagine eviction would be anywhere near that since it is a much simpler process.
If he is making the rent payments, you will have to give him a 30 day notice and then if he doesn’t move out, you will have to evict.
If he has not made the rent payments, you can start the eviction procedure immediately.
If there is no written agreement, he is legally on a month to month rental agreement.
I sure hope he has been mailing the rent to you and then you make the mortgage payments. If he has been mailing the mortgage payments directly to the bank, you need to speak to a good lawyer before you do anything.
i live in houston and can tell you that cypress is doing pretty good but it’s still a buyers market which means you will most likely not be able to sell it for what you paid unless your property is in 1 of 2 communities in that area that are doing exceptionally well…
so lease option may be your only option that doesn’t require a lump sum of cash; i would enlist a local agent to handle the eviction and leasing; i work with a great re/max agent in that n. houston that i could refer you to if you haven’t found someone already.
specifically, you would need (2) seperate agreements, a standard lease contract and then an option agreement that stipulates the terms which i suggest should probably be a $5000 option fee and $200 per month go toward the purchase of the home maybe $300… there are many people looking for a place to stay but the home will have to be marketed aggressively and you need to be financially prepared to spend some money to get rid of this problem real estate! trying to take the cheap route on this could prove long term to be very expensive!