Typically, who takes care of the property once the Tenant-Buyer moves in?
Hi Chris,
This depends upon what type of arrangement you have with your tenant. Since you referred to him/her as your tenant/buyer, you could have a lease option agreement, a land contract, or a triple net lease within a trust.
In the triple net lease scenario, the tenant/buyer has full responsibility for maintenance and repairs. The other two situations will depend upon the written terms of your agreement.
Da Wiz
Thank you for your reply. Where can i learn more about triple net leases?
I read one of the ebooks on this site, that used the scenario where the Seller (who is still the only one on the deed, I assume) picks up any maintenance over $200, and the tenant-buyer picks up any maintenance up to $200 in a single month, leaving the Investor with no maintenance costs.
Is this scenario commonly used? It seems to me, if I were an unscrupulous tenant-buyer, if I wanted some new expensive appliances, like a new furnace, it might be easy try to get it replaced (for only $200 of the Tenant-Buyers’ money) by making sure it conked-out prior to purchasing the property.
I’d like to hear some comments and suggestions. Thnaks.
Triple Net Lease - lease in which the tenant is to pay all operating expenses of the property so that the landlord receives net rent, frequently used to mean tenant pays taxes, insurance, and maintenance in addition to normal operating expenses.
These leases are usually used commercially and there really is no incentive for a tenant to agree to one unless the property is in a land trust and the tenant is given homeownership benefits. In that case, he is entitled to property tax and mortgage interest writeoffs. In addition, you have the opportunity to share future appreciation for higher rents which will usually make the difference between a positive and negative cash flow.
Da Wiz