(2015)
Just got it back from Buyer. They are unable to make rent payments. Buyer has another 6 months to purchase.
the property is now worth $150,000. Can I sell it or do I have to wait for the full 6 momths?
when you say ‘they are unable to make their rent payments’, have they already defaulted on the rent? also, did you get a non-refundable option deposit from them?
Yes defualted on rent payments. Yes on non - redufundable $10k.
When “selling” on a lease/option, the option and the lease should be mutually dependent, so a default of the lease, extinguishes the options and visa versa.
When “buying” on a lease and an option the option and lease should NOT be mutually dependent. A default on the lease then does not extinguish the option, or visa versa.
What does your agreement spell out regarding a default on the lease? Nobody here has a copy of your agreements, so only you could possibly know what your options are.
well, it’ll ultimately come down to the language of your paperwork. my paperwork stipulates that if my tenant/buyer on the lease purchase defaults on the ‘rent’ at any time, that voids the entire agreement. also means that non refundable option deposit is gone. i then have the ability to legally sell the property to someone else.
my main issue with a default in the rent is, lenders like to see those on time payments the tenant/buyer makes to me. helps them get their financing. it’s why i usually go through the importance of not defaulting with the t/b before they even move into the place.
bottomline, pay a visit to the attorney, move onto another buyer so that you don’t get stuck with payments.
my 0.02
UPDATE #2
Just close escrow on sub 2 deal. $46,000 profit after fees and taxes. First sub 2 deal. :biggrin :shocked
RECAP: Purchase sub 2 for $89,000. sold to first Buyer for $125,000. Two year lease option he could not complete.
Just sold to 2nd Buyer for cash for $143,000.
On to the next one. :cool
Congratulations!
How do I find another one? :shocked :biggrin :biggrin :biggrin
How did you find the first one?
atta boy. you moved onto another buyer like a said, and voila. and might i say, nice profit on that one deal. sweetness!
on another note, it might be something you want to think about for the next sub2 deal. when you have a spread like that right off the hop, you might just consider selling it off for cash right away so you can make your profit and move on.
in this situation, unless you’re making 1,000/month in positive cashflow by selling on the rent to own, in this particular situation the equity spread is what’s attractive about the deal. so just sell it for cash if this comes up again.
this is chunkoftheearth signin out.
I read through your earlier posts and noticed that you wrote that you were the listing agent on this last deal, and that the seller just wanted out, so you offered to take it sub2.
I don’t know how you would duplicate this, except to solicit listings, and then do a terrible job of marketing it, and then wear out the seller, until he begged you to take over his debt. j/k :shocked :biggrin
Or, why not make sub2 offers on stale/expiring listings?
Lol. Thank you yes I guess I can make offers that way. Thanks