Skip to comments.Lease/Option to buy?
Posted on 08/22/2008 8:24:51 AM PDT by LuLuLuLu
OK, another vanity on my part. (You all are too smart for me to ever offer any political commentary.)
What does anyone know about doing a lease/option to buy? It's looking like Mr. Lu is going to be transferred to The Netherlands, and we have a wonderful house. Neighbor has expressed interest, but I really don't want to spend thousands with an attorney.
Can anyone point me in a good direction?
As an aside, I click on FR first thing every morning. You folks are great!
If you are going to be out of country, I would suggest you SELL.
Unless you have a reputable property management company oversee your home, you may find yourself in a financial mess. You will still be responsible for all repairs and maintenance. Tenants will NOT care for your property with the same responsibility an owner will.
If the neighbor is serious about a LEASE TO OWN contract (not a lease option), then make him lible for all repairs and maintenance during the lease term.
Just my 2 cents....
Do you live close to a military base. If so, I have a few options for you, that will take care of the house, painting, maintenance, etc with no cost to you.
He stiffed me of "rent" after six months sold my boat I left for him to use until he bought. ($400 jon boat). Tore the house up. Had to sue him, etc. Sell the damn thing.
Yeah I am still bitter. LOL!!
It really sucks if you are a landlord who lives on a different continent. Of course, you can hire a property manager who will be happy to take 35% of the rent and none of the liability
Oh and lease option- now you will be dealing with a tenant who probably has bad credit and/or commitment issues and/or a house somewhere else she is upside down on and can't sell so might let go to foreclosure
who MIGHT want to buy your house
but who will live there and tear everything up, then expect you to fix everything perfectly or replace everything like the appliances, furnace, a/c, roof, paint, carpet, wallpaper, siding, fence, lawn etc etc
- just before settlement
You can always find another great house. Just Sell.
Words you're likely to regret, especially if you are out of the country.
Been there done that. My tenant/potential buyer ended up stiffing me out of two months rent while I was somewhere else, left the place a pig sty, and tried to sue ME to get his “security deposit” back by telling his lawyer it was a “down payment” on the house.
If you decide to go this way though, there are leases that due to geographic seperation, the TENANT is responsible for repairs.
Depending on what state you live in, your mileage on this may vary.
I STRONGLY suggest you don’t do it. Whether you trust your neighbor or not.
It's almost impossible to care for a house out of country. I live in FL, and all the time hear horror stories about people who have “rented’ their house over the summer while they were back home in MI or whatever. All the time I hear about houses being robbed or vandalised and they can't even get hold of the owner to let them know.
My father managed rental properties for years. He always went and collected rent personally. Just to say “hello”...If you can't keep your eye on a property, you have no idea what may happen. Unless you have a management agent you REALLY trust.
When my husband first became disabled, we bought a house through a buyer's mortgage. It's still buying a house by payments, but the house and responsibility were only ours. That worked out well for us and the owner, but then we were good people.
You write a contract with a party that agrees to buy the house at a certain date (the idea being ... they will be able to come up with the money down at that date). You must have some money before they move in or you are liable to serious loss.
It does not guarantee a sale. If they do not have the money to close the sale you can re-market the house. Which means again payments out with no income from the property.
By far the best is an outright sale. If the buyer has no money to pay down ... they are not a good prospect. It shows they are unable to live so as to have savings. Many never learn to save money. Thus the recent foreclosures on real estate. They got into the property with 110% borrowed and sure enough are unable to meet the payments.
Sorry, you probably know all of this.
If you allow them to move in and they damage the property or have another family move in with them it gets ugly; as how do you get money from poor people and the courts take the point of view that you would be putting them out on the street homeless.
I had this happen to me on a straight lease contract. Not intended to be a sale. The court sides with the tenant many times. I was a Realtor of experience. They paid the lease as agreed for 4 years and then ended up stiffing me for the last 6 months plus the utility bills too because the city files against the property. Tough lesson.
As to the contract there are usually forms available (that are required by the state); and all you do is fill in the blanks as to your agreement with the purchasing party and get it notarized and filed of record.
Dangerous to agree to allowing a party possession of your house without a substantial down payment that would cover the cost of repairs or legal fees in the event they did not buy at he agreed upon time.
Hope this makes sense to you and is helpful.
Not intended to be overly simplistic ... only info in case you do not already know it.
Lu, the house is no longer wonderful if you move to the Etherlands—it will be an anchor to you.
Being a long distance landlord does not work.
Sell the house, invest the money, have a blast in Europe, and when it comes time to come back to the States, you can rent until you find the house you want.
You’ll have no headaches, no heartbreak,no carrying costs, and your income tax return will be much simpler.
Uncomplicate your life and enjoy this new upcoming chapter of it.
Attorneys love it when people save money on the front end, because it means much greater fees on the back end sorting out the mess.
Regardless--SELL. Being a landlord is a risk in any situation; being a landlord while living half a world away from your investment is an absolute disaster in the making.
If you know someone who has expressed interest, why not figure out if you can help them into a traditional mortgage? It would be in their best interest as well as yours. If you have a healthy amount of equity built up, think about sacrificing a percentage of it toward your potential buyer's down payment. You don't really need a lawyer to figure any of this out--a good title agent can help you out for a fraction of the cost.
Best of luck!