Partner Moved In Tenants Will I Was Out Of Town!!!
I am so flippin' mad and frustated! O.K. Here's the deal.....
I obtained a property on l/o for $212,000. I obtained the property through the MLS and had my broker write the lease/purchase deal. I have my RE license, but it is in a holding company at the present time. Went and signed the papers in my name with the intention of assigning the contract to an L.L.C. that I was going to form with my partner who was going to fund the repairs needed and cover holding costs ( about $30,000.) We made up an L.L.C. operating agreement stating that I would be the managing partner in charge of decisions for the L.L.C. Your basic elephant/mouse partnership. She supplies the cash, I find the deal,do all the work, and market the property. Our exit stategy was either a fix & flip, or a 1 to 2 year l/o. Here's the catch... She wanted to learn the rehab and flip process. I told her it wouldn't be a problem as long as she didn't interfer with the decisions I made. ( In hind sight, I should have told her no, but I didn't want to lose the funding.) As you can probably see coming, and I must have unconsiously because I delayed in filing with the state for the L.L.C. and then assigning thecontract; we started having problems within the first 2 weeks. She would go out of town without making funds available for materials, questioned my decisions on which contrators to use, wanted to make unnecessary repairs. basically interfering with the whole rehab process. Usually, I can be in and out of a house in 30-45 days. I quoted her 90 days on the rehab and a total out of pocket of $27,000 with holding costs for 6 months when i pitched the deal. Somehow, even with the unnecessary repairs that I didn't want to do we still came in at $31,000 and within 90 days. Here's where it get's interesting!
The owner comes by sees repairs and now wants more money out of the house. He wants the buying comm. on the l/p of $6500 or he's threating to not close when we exercise. Then, my partner signs an 18 month straight lease with a couple represented by a realtor. She then signs an agreement with the agent to pay him a 3% comm ($9000.00!!) if they decide to turn into l/o buyers within 1 year. On top of it all, she signs the agreements while I'm out of town for 3 days and moves them in. I come back to find out they moved in. Now that I've gone on and on about my situation, here are my problems...
1. The l/p with seller is in my name. The lease agreements are in hers. I want them out! How do I tell the tenants their lease is invalid and they must get out?
2. They have a dog. My l/p with seller has a no pet without his consent clause. I fear I'm gonna lose the property to him because he's looking for a way to get the property back now that repairs are done. Any ideas?
3. Just found out seller's agent is his wife and didn't disclose her interest in property. Can I use this to my advantage?
4. The property is now worth $300,000. My interest in property is worth about $20,000 in profit. Can I somehow sell my interest to someone else?
Sorry this is so long but I wanted to give as much detail as possible.
sorry to hear things arent working out like you would like
you would be able to sell your profit share but not @ full face value,if his is a hasle for you which it sounds..
! migrating !
this might be the way to go
roy
Do you have any funds involved? It sounds like a huge mess. If you have no money in it, I would try to get your partner to buy you out. After all, she is the one standing to lose $31,000.00 if You don't exercise the option.
Short answer, short on time.
Good Luck,
Shawn(OH)
Dear Sir,
Poor selection of partner. Been there done that.
Imediately contact her and sit down with her and utilizing your fantastic negotiating skills have her buy you out. Her training days are obviously over. She thinks she wrote the book, let her go. Yes even if you have to take a note back that you can secure with some little token property she owns or is involved in. Get rid of her.
Also, slow down, go quietly, present the closed face, let others swake and yell and you merely do your thing. Your deals are not tight enough, too many holes.
The bit of info about the wife who is the broker and he wants to pay her a delayed commission or he will fail to close. Nice, she could on proper complaint to her Realty Board be chastized or suspended for a while.
But you slow down. Want an investor look among the newly retired bored old men that populate the world. I use them in strings of five. As they get greedy or annoying I farm them out and take the next one in line.
Besides you should be at a point where you may not need an investor.
I hope all this is helpfull, wish someone had advised me about the lady investor who informed me she had sold my office building out from under me. Guess who bought it? Right on her covert trust. Damn
Lucius
Well, I have offered her a buyout of $9500 for a future total return of $26,000. We'll see where it goes from here. Glad I gave myself some protection to bargain with. Something is better than nothing.
The problem with the pet clause was written in by the seller. Didn't consider it a problem at the time. My paperwork with the seller is actually pretty sound, just didn't want to deal with the headache of legal action to force the sale.
Just wanted to add this will be the last time I buy on l/o. From now on, I will be doing sub to's. It's alot easier when you have the deed!