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I have a house in Tennessee. I had to move because of job reasons. I
put the house on sale for $345,000. It did not sell for a while.
Finally I put it for sale by owner for a price of $300,000 with a
friend showing the house. I also put a lease to purchase option on the
house. A couple of weeks ago three ladies and two kids visited the
house and said that they were interested in lease to purchase. One of
them was a grandmother(age 85), her daughter(age 65), her grand
daughter(age 27) and the two kids (ages 2 and 3) were grand daughter's
kids. We finally negotiated a price of $295,000 with a rent of $1800
per month with $400 going towards the principle amount. The deposit
amount was $5000. If they buy the house it would go towards the
principle amount otherwise it was non-refundable. They said that the
rent was too high and that they were willing to pay a higher deposit
to lower the rent. We said ok the rent will be $1200 with $200 going
toward the principle and the deposit will be $15000. The daughter said
that they still wanted the rent lower because the grandmother and the
grand daughter will be paying the rent and living in the house with
the kids. So they wanted a deposit of $20000 with rent of $1000 and
nothing going towards the principle.
When it came to documentation, they say that we can do a credit check
only on the grandmother and not on the
granddaughter although both of their names will be on the lease to
purchase documents. The grand mother is retired. The grand daughter is
going to school and also has a job. The rent money will be paid by the
grand mother and grand daughter. I have asked them why we cannot do a
credit check on the grand daughter. They say that it is because they
are trying to build her credit history so that at the end of the year
she will have a better credit history and she will be graduated from
school and the house will be bought in her name. I have asked that the
daughter sign the lease to purchase agreement. She won't sign the
lease to purchase. The friend who showed the house to these ladies
said that they drive expensive cars.
We love the house and are afraid whey they do not want us to check the
credit history of the grand daughter. We are afraid that if we have to
evict them or they destroy the house, it may cost us too much.
What does it cost to hire an attorney in Tennessee and evict a tenant?
What are your opinions? Should we go ahead with the lease to purchase?
With the housing market doing not so good we are inclined towards
accepting this but are afraid what kind of tenants we may run into?
What would you have done in such a situation?
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In article <57ent3tuv5ce470lnbbdofpji1sa4c5gnr@4ax.com>,
johnsmithme2004@yahoo.com wrote:
We love the house and are afraid whey they do not want us to check the
credit history of the grand daughter. We are afraid that if we have to
evict them or they destroy the house, it may cost us too much.
Just a point of common sense here...the only reason that they
would propose this deal is that they cannot get a loan from a
bank. My question is why do you want to act as a bank when all
the traditional banks will not touch this deal. Are you a better
banker? Or do you know more about mortgage lending than all the
companies in your market? My advise would be to follow the lead
of these professionals and not get involved in this screwy deal.
Desperation is not a good reason to be foolish.
-john-
--
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John A. Weeks III 612-720-2854 john@johnweeks.com
Newave Communications http://www.johnweeks.com
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On Sat, 15 Mar 2008 08:00:34 -0400, johnsmithme2004@yahoo.com wrote:
I have a house in Tennessee. I had to move because of job reasons. I
put the house on sale for $345,000. It did not sell for a while.
Finally I put it for sale by owner for a price of $300,000 with a
friend showing the house. I also put a lease to purchase option on the
house. A couple of weeks ago three ladies and two kids visited the
house and said that they were interested in lease to purchase. One of
them was a grandmother(age 85), her daughter(age 65), her grand
daughter(age 27) and the two kids (ages 2 and 3) were grand daughter's
kids. We finally negotiated a price of $295,000 with a rent of $1800
per month with $400 going towards the principle amount. The deposit
amount was $5000. If they buy the house it would go towards the
principle amount otherwise it was non-refundable. They said that the
rent was too high and that they were willing to pay a higher deposit
to lower the rent. We said ok the rent will be $1200 with $200 going
toward the principle and the deposit will be $15000.
A very good deal for them.
The general "rule" is to rent a home for 10% of it's value.
With the numbers you've given, the rent should be around $2900 a
month.
The daughter said
that they still wanted the rent lower because the grandmother and the
grand daughter will be paying the rent and living in the house with
the kids. So they wanted a deposit of $20000 with rent of $1000 and
nothing going towards the principle.
If nothing is going towards the principle, how will they buy
the house?
Maybe I missed something.
When it came to documentation, they say that we can do a credit check
only on the grandmother and not on the
granddaughter although both of their names will be on the lease to
purchase documents. The grand mother is retired. The grand daughter is
going to school and also has a job. The rent money will be paid by the
grand mother and grand daughter. I have asked them why we cannot do a
credit check on the grand daughter. They say that it is because they
are trying to build her credit history so that at the end of the year
she will have a better credit history and she will be graduated from
school and the house will be bought in her name.
I don't see a credit check effecting her credit that much.
I have asked that the
daughter sign the lease to purchase agreement. She won't sign the
lease to purchase.
I doubt she's required to do so. If she's not going to be
legally financially responsible, there's no reason for her to sign.
The friend who showed the house to these ladies
said that they drive expensive cars.
We love the house and are afraid whey they do not want us to check the
credit history of the grand daughter. We are afraid that if we have to
evict them or they destroy the house, it may cost us too much.
What does it cost to hire an attorney in Tennessee and evict a tenant?
You'll likely need to call lawyers around the area where the
home is located and ask.
What are your opinions? Should we go ahead with the lease to purchase?
With the housing market doing not so good we are inclined towards
accepting this but are afraid what kind of tenants we may run into?
What would you have done in such a situation?
Here is what *I* would do.
I would run a check on everyone whose name is on the lease to
purchase agreement. They may baulk over it, but if I'm renting to
someone, I want to be as sure as possible that they'll pay rent on
time and not destroy the property.
--
Kent
"Excuse me. Have you seen a blowfish driving a sports car?"
"Bloody Torchwood!"
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johnsmithme2004@yahoo.com wrote:
I have a house in Tennessee.
[can't sell the thing so it asking about a lease with an apparently sub
prime borrower]
Seems to me you have nothing to lose here if you can get your house back
ok upon default. If the deal falls through, at least you've gotten some
income from the tenants. The catch is if the tenants are scam artists
rather than just bad credit risks. So you have nothing to lose unless
the fact of their residence in the house damages the house or they
somehow manage to use it for a purpose which reduces you (like using it
to mfg crack).
What I'd do is to run personal references and criminal checks on all the
folks. The last thing you need is to lease to a crack maker or a family
of gypsies who will use your house as a base for criminal activities and
then strip it bare when they leave.
-paul
ianal
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Kent Wills wrote:
A very good deal for them.
The general "rule" is to rent a home for 10% of it's value.
With the numbers you've given, the rent should be around $2900 a
month.
I think you meant 1% above :)
The daughter said
that they still wanted the rent lower because the grandmother and the
grand daughter will be paying the rent and living in the house with
the kids. So they wanted a deposit of $20000 with rent of $1000 and
nothing going towards the principle.
If nothing is going towards the principle, how will they buy
the house?
Maybe I missed something.
The lease to own would lock them in as being able to buy the house at
the end of the year and prevent him from selling it to someone else in
the meanwhile, even though they're not building up any equity (other
than the deposit.) "They say that it is because they are trying to build
her credit history so that at the end of the year she will have a better
credit history and she will be graduated from school and the house will
be bought in her name."
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In article <57ent3tuv5ce470lnbbdofpji1sa4c5gnr@4ax.com>,
johnsmithme2004@yahoo.com says...
I have a house in Tennessee. I had to move because of job reasons. I
put the house on sale for $345,000. It did not sell for a while.
Finally I put it for sale by owner for a price of $300,000 with a
friend showing the house. I also put a lease to purchase option on the
house. A couple of weeks ago three ladies and two kids visited the
house and said that they were interested in lease to purchase. One of
them was a grandmother(age 85), her daughter(age 65), her grand
daughter(age 27) and the two kids (ages 2 and 3) were grand daughter's
kids. We finally negotiated a price of $295,000 with a rent of $1800
per month with $400 going towards the principle amount. The deposit
amount was $5000. If they buy the house it would go towards the
principle amount otherwise it was non-refundable. They said that the
rent was too high and that they were willing to pay a higher deposit
to lower the rent. We said ok the rent will be $1200 with $200 going
toward the principle and the deposit will be $15000. The daughter said
that they still wanted the rent lower because the grandmother and the
grand daughter will be paying the rent and living in the house with
the kids. So they wanted a deposit of $20000 with rent of $1000 and
nothing going towards the principle.
They claim to be able to put down twenty grand, but have poor
cash-flow? Also, if the rent doesn't contribute at all to the
principle, then they aren't really buying the place.
It sounds just plain weird to fork over $20K to move into a
rental. They could just go rent some other house without that
kind of deposit.
When it came to documentation, they say that we can do a credit check
only on the grandmother and not on the
granddaughter although both of their names will be on the lease to
purchase documents. The grand mother is retired. The grand daughter is
going to school and also has a job. The rent money will be paid by the
grand mother and grand daughter. I have asked them why we cannot do a
credit check on the grand daughter. They say that it is because they
are trying to build her credit history so that at the end of the year
she will have a better credit history and she will be graduated from
school and the house will be bought in her name.
One inquiry isn't going to seriously hurt her credit bureau
score. The refusal means exactly what you fear it means. The
individual has a bad credit history. NOT just lack of history,
but has bad debts on file.
Also, if grandma is retired, and granddaughter is in school, does
the group actually have sufficient income to cover even the
reduced rent they want?
I have asked that the daughter sign the lease to purchase
agreement. She won't sign the lease to purchase.
If she intends to live there on an ongoing basis, then she should
be willing to bear part of the responsibility to pay. Maybe her
refusal to sign means that she also wants to avoid a credit
check. Hmmmm... I wonder why that might be?
The friend who showed the house to these ladies
said that they drive expensive cars.
But poor cash flow when it's time to negotiate the mortgage? And
suggestions of poor credit histories?
We love the house and are afraid whey they do not want us to check the
credit history of the grand daughter. We are afraid that if we have to
evict them or they destroy the house, it may cost us too much.
Again, the high deposit is very strange here. Especially if they
intended to default on rent quickly, or to trash the place. But
then again, there are plenty of tenants who eventually default
(and who also impulsively or carelessly damage the place) without
planning to do so at the time of move-in.
On the other hand, maybe they don't actually have the $20K, and
will present some excuse or sob-story to try move in with much
less commitment.
One idea that comes to mind, is some intent to do something
sleazy with their possession of the house. Rent it out to a
bunch of undocumented immigrants? Turn it over to their cousin
Joe who will set up an amphetamine lab? Somehow misrepresent
themselves as owning the property to enable some other scam?
They may like the idea that you won't be close by to come check
on things, or to notice problems while doing repairs, etc. And
that an default and eviction may be more time-consuming if you
must deal with it long-distance.
What does it cost to hire an attorney in Tennessee and
evict a tenant?
Probably a lot more than just rejecting this group of tenants.
What are your opinions? Should we go ahead with the lease to purchase?
With the housing market doing not so good we are inclined towards
accepting this but are afraid what kind of tenants we may run into?
What would you have done in such a situation?
It would never occur to me to rent that group. In general,
renting the place out might be a good idea. But to people who
don't have such red-flags as refusing a credit check.
--
Get Credit Where Credit Is Due
http://www.cardreport.com/
Credit Tools, Reference, and Forum
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johnsmithme2004@yahoo.com wrote:
I have a house in Tennessee. I had to move because of job reasons. I
put the house on sale for $345,000. It did not sell for a while.
....
[3 parties come forward and are negotiating a lease to purchase deal.
Owner is told he "can not" do a credit check on one of the party.]
....
We love the house and are afraid whey they do not want us to check the
credit history of the grand daughter. We are afraid that if we have to
evict them or they destroy the house, it may cost us too much.
What does it cost to hire an attorney in Tennessee and evict a tenant?
What are your opinions? Should we go ahead with the lease to purchase?
With the housing market doing not so good we are inclined towards
accepting this but are afraid what kind of tenants we may run into?
What would you have done in such a situation?
Ummm, I don't know about you but my gut is screaming WALK AWAY!!! from
this contract. Why would you accept a deal that may put you in a
position of having to spend a ton of money - long distance - if this
falls through? Spending money on a long distance eviction is better than
the possibility that they default? Listen to your instincts and don't be
such a nice guy when dealing with your $300,000.00 asset.
The proposed deals are non-sensical. They keep arguing you down on the
rental amount while every change in the lease to purchase end of things
makes less and less sense. IF they actually have $20,000.00 to pony up
as a deposit why can't they qualify for a loan? (There's that gut
screaming again...)
Anyone who tells you that you "can not" do a credit check on them is
most likely hiding something that you *do* want to know about. Like
maybe previous defaults on rental leases and outstanding judgments for
breaking leases? If the person has none or little credit history the
type of check you are running will have next to no impact. Insufficient
credit history doesn't get any worse - or any better for that matter -
with a single credit check.
Check you own gut on this one. Mine guy says a lot sounds fishy here.
Rick
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johnsmithme2004@yahoo.com wrote:
I have a house in Tennessee. I had to move because of job reasons. I
put the house on sale for $345,000. It did not sell for a while.
Finally I put it for sale by owner for a price of $300,000 with a
friend showing the house. I also put a lease to purchase option on the
house. A couple of weeks ago three ladies and two kids visited the
house and said that they were interested in lease to purchase. One of
them was a grandmother(age 85), her daughter(age 65), her grand
daughter(age 27) and the two kids (ages 2 and 3) were grand daughter's
kids. We finally negotiated a price of $295,000 with a rent of $1800
per month with $400 going towards the principle amount. The deposit
amount was $5000. If they buy the house it would go towards the
principle amount otherwise it was non-refundable. They said that the
rent was too high and that they were willing to pay a higher deposit
to lower the rent. We said ok the rent will be $1200 with $200 going
toward the principle and the deposit will be $15000. The daughter said
that they still wanted the rent lower because the grandmother and the
grand daughter will be paying the rent and living in the house with
the kids. So they wanted a deposit of $20000 with rent of $1000 and
nothing going towards the principle.
Lease/Purchases are Leases first, and options to purchase second.
Given what you've state above, it's a straight lease at $1000 / month.
The $20k deposit is what, an escrowed earnest $$ toward a future
purchase?
So you should have 2 (two) separate contracts, a standard Lease contract
at $1000 / month and a different Purchase contract with a fixed closing date
and noting the $20k earnest money deposit.
When it came to documentation, they say that we can do a credit check
only on the grandmother and not on the granddaughter although both
of their names will be on the lease to purchase documents.
The grand mother is retired. The grand daughter is
going to school and also has a job. The rent money will be paid by the
grand mother and grand daughter. I have asked them why we cannot do a
credit check on the grand daughter. They say that it is because they
are trying to build her credit history so that at the end of the year
she will have a better credit history and she will be graduated from
school and the house will be bought in her name. I have asked that the
daughter sign the lease to purchase agreement. She won't sign the
lease to purchase.
So why do you care who signs? If one has sufficient credit, and you have
the $20k deposit, it really doesn't matter, you've got security.
The friend who showed the house to these ladies
said that they drive expensive cars.
Irrelevant.
We love the house and are afraid whey they do not want us to check the
credit history of the grand daughter.
Because you're ignorant, and ignorant people fear the unknown.
We are afraid that if we have to
evict them or they destroy the house, it may cost us too much.
More than $20k ?
What does it cost to hire an attorney in Tennessee and evict a tenant?
Less than $20k.
What are your opinions? Should we go ahead with the lease to purchase?
No. But not for the "reasons" you fear.
With the housing market doing not so good we are inclined towards
accepting this but are afraid what kind of tenants we may run into?
Is that a question?
What would you have done in such a situation?
A straight LEASE, with First month rent, Last month rent and a Security/Damage
deposit up front. Then, if they really wanted to purchase the home at anytime up
to the end of the lease, a separate Purchase/Sale contract, with a fixed closing
date,
and a reasonable earnest $ deposit.
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What would you have done in such a situation?
Andy comments:
I don't know your local state laws, but in Texas, if a house is
"leased with option to buy", an eviction process is radically
different than a straight rental since the tenant has a
vested interest in the property...
An eviction is done in district court, with a lawyer, rather
than the simple procedure in front of a judge for a straight
rental.
Perhaps they know this. Or perhaps they are just a couple
of women that just want to rent and don't understand a thing
about the business end....
I've rented houses for many years in the past. Personally,
any prospective tenant that refuses a credit check or
brings up ANY legal matter at all was never considered.
Seems to me like they are tipping off what their intentions
might be, and , even tho you may prevail in a dispute, it
will cause you lots of trouble and expense....
Furthermore, if you can't collect the rent in person, or
see the property every month, what will you do the third
month when they "don't have the rent right now ".....
You go no leverage here....
You would be better off hiring a local real estate company
to manage the lease for you. You won't much any money
on the deal, but you will get a little, and someone will be
"responsible" for your property...sort of...
Andy in Eureka, Texas
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