Quality Of T/B
Do you all usually take the 1st person to come along with the $7000 option money and says they can handle the monthly rent?
Got many calls on my L/O property, but not many can fork up the $$$$ and/or afford the monthly rent.
Got someone really hot on property, has the option $$$ says he can afford the $1400 month. Is self employed..says he had a medical problem in the past hence the bad credit. No foreclosure or repo, just medical and cc charge offs.
But for some reason, I just don't feel right about this guy...actually I haven't felt right about anyone I've spoke too about the home....but I guess after all thats why these folks need to L/O.
Bottom line is am I being too cautious, or should I not worry too much cause this guys prepared to come up with $7K?
TIA
If you don't feel right, there are some companies that you can use fairly inexpensively to do some research for you. Try http://www.factualdata.com/index.html - OR _
http://www.ntnnet.com/index2.html You can get some pretty comprehensive info from them.
tompa,
Glad to meet you.
You said it "but I guess after all thats why these folks need to L/O."
Here is how I handle the situation not with an L/O, but CFD.
I always do a credit check, the person has $7K first part of the check, second part of the check is I take their wrist and check for a pulse, if they have one that means $7K and a heartbeat, they pass my credit check.
If they flake out you always have the house to take back and do another credit check with the next person.
John $Cash$ Locke
Thank You...yeah that's kinda how I was starting to feel. Appreciate the reassurance.
THX again
Hello,
I believe $Locke has got it down well -I was reading what he had written while "working" in the office, and I laughed out loud... Gave myself away.
Were I you, I'd take the 7k, put .5 in the bank as a back up; then I'd take the other .5 and spend it wisely: on me & mine -or bills.
Thanks,
OnTheWater :-D
John,
That's right, I had forgotten about the second part of the credit check. That's great. LOL
I know the dilemma. Compelling stories, apparently responsible renter/buyers, etc. I haven't sold on L/O yet, but I'm finding lots of interest in terms; in fact, I much prefer it because if I do a note with a balloon, any iffy parts--like frost footings, lots of fire doors, 7 foot ceilings--that gov't money might require don't really apply. And for refi, there is always some lender who can work around them.
My brother-in-law sells trailers on $1 down, $99 a month, and never has to wait long. Sure, he has to foreclose on them sometimes, but for those who take him up on it, it can be a great deal...even if the note lasts forever...
Anyway, consider taking a little less down to increase your pool of buyers. Just make sure you get enough to cover problems. And remember who you're working with; no one with stellar credit will need your financing, and that's just part of the deal.
We just got a security deposit for our first L/O tenant. The first applicant's story just wasn't jiving with the paperwork that was filled out. They didn't have as much option $$$ as we initially wanted either. My partner wanted to take them because he was nervous we wouldn't get a tenant. I just didn't feel right about it, though. The next day someone else came along with the full amount of option $$$ and their story and paperwork jived better, so we went with them. It really wasn't that hard (now that it's done) and now I know that I will be able to find tenants for other properties in the future.
I think our hardest part is thinking like the tenant. We aren't in a position where we can imagine someone being able to come up with (what seem like to us) large chunks of money to put down on a house. But we're working on getting over that!
If you are going to screen tenants and run credit checks, etc...
Do it correctly and legally. A L/O is a rental. You have to clearly follow the rules when it comes to no discrimination. To be seen as picking one person over another for reasons such as 'it felt right' or they 'seemed better'. As a landlord you have to take the first person who passes the criteria. If you do not publish a list of the criteria you can not easily show you have followed the same criteria for each applicant.
John L has a good plan (cash talks). Assuming the cash is not from illegal sources you are fine. If it is from illegal sources and you looked the other way you might end up with a different problem (drug seizure laws, etc).
1. Keep it simple. Decide how you will screen up front before you talk to anyone. Stick to the plan. Publish the plan so people know. Screens them out if they know they will not fit.
2. Have some idea where they get their money from if you are just looking for a large wad of cash. You do not have to call their mother but be able to show you at least asked and the answer did not include a 'wink, wink, nudge, nudge.'
If you go the L/.O route you are still the landlord and you can not legally expect the tenant to make major repairs, etc. Had an L/O court case out this way where they had agreed that the tenant pays for everything. The tenant fails to pay the rent after a period. In the eviction process the tenant supplies pictures of the broken items and the judge decides in their favor. Owner was not happy and caught completely off guard.
John
[addsig]