Mark in St. Louis

Well, here is an update....although it is not much of an update. I finally go ahold of my attorney. He has left messages with the TB's attorney. The TB's attorney has not returned any of my attorney's calls. My attorney said it is possible he may not becuase he knows that they now have until the trial date to remain in the home....which is mid June. I am feeing very much that I am not in control here. Very frustrating how the damn legal system works. It screws over the honest landlord and favors the dirtbag tenants. Any suggestions on what to try next?

This experience reminds me of one of my favorite books. "Failing Forward" by John Maxwell. Everyone should read it. I will warn you though that Maxwell started his career as a Christian minister...and he does let his faith carry throughout his books. I know for a fact that when this experience is finally over, I will be a better person, and better real estate investor as a result of it. I am a little embarrased at my initial posts here, but at the same time I'm glad this board is here and Michael is the type of person to let people post the good and bad of this business. He could have easily yanked my post and make this board a warm, fuzzy place with the appearance that real estate investing is all good with no downsides. Instead, he takes the high road, and lets everyone see both sides. Thank you for that Michael. This board gave me a place to vent my frustrations on the day I found out the bad news. It felt good to do that. I slept on it and am now in the process of getting this thing corrected...all the while keeping my integrity intact.

Ok folks...here is the latest update. I spoke with my attorney and here is what happened yesterday. The TB's attorney is a lawyer in the country in question. He knows the court's docket is very very backed up. He knew that filing a stay would buy his client more time in the house. His attorney told my attorney that his client is plannng to move out but just needs some more time. I have told my attorney to offer that I will forgive all past arrearages, and take what he has paid thus far as liquidated damages if he can be out in two weeks....and sign something to that effect. Ball is now back in his court. Stay tuned.

I want to thank everyone for their posts, feedback, and suggestions. I have had a night to sleep on this since I found out the news and am a little bit more calm. I will be talking with my attorney today to find out exactly what was said in court yesterday...and just what it is that the dirtbag wants. After that I will formulate a plan of attack. I doubt I will offer him back his option deposit. Heck, that doesn't even cover his arrearage. I might let him out with no additional charges or possibly give him $500 moving money however. I'll make sure to keep this post going so everyone can learn from this experience. One more question....should I go ahead and report this guy to the agencies or should I wait until he is out of the house?

Adam, Here are the numbers: Deal with Sellers 24 month term $189,900 option price $10 option fee $1,485/mth rent Deal with current T/B 12 month term $209,900 option price $6,000 option fee (he has only paid $3,000) $1,685/mth rent Current FMV is approx $200,000. We marked it up $9,900 for the 12 month lease. Appreciation rates in the area average around 4.5% per year.

I understand your question Michael. The LLC has it's own bank account. All funds paid to and paid out were the same LLC and on the same bank account. As a matter of fact, every sandwich deal I have done thus far (a whopping 3) has been in a separate LLC...each with it's own bank account. I like these to each be their own island. Call me paranoid but it only costs $115 to set up an LLC. I know for a fact that the sellers are going to be pissed. Heck, I would be too. And I really do hate to do this to them. But in this case I have to do what I have to do.

Here's the thing. This guy is self-employed and his biz has taken a downturn. Sure, I can wait this thing out 3 more months and get him out. But in the meantime I will be down approx $9000 on this deal...plus court costs and attorney fees. What I'll eventually get is a judgement for all back rents, late fees, and attorney fees. BIG DEAL! A judgement doesn't mean crap to me. The guy will never pay it. And him being self-employed, it will be next to impossible for me to ever collect on it. there is not way to garnish. also, the agreement is with him...not his business...so his business assets are not at risk. So, knowing that, why would I continue pay rent each month, and attorney fees, that I know I will never get back? Answer...I wont. If this means a suit from the seller....bring it on. Like I said...the agreement is with the LLC...not me. And the LLC has zero assets. Did I make a mistake and use bad judgement in letting this guy in the house. YEP! But there is a limit on how long I am willing to pay for the mistake. Adam...I'm not sure what you mean by this but trust me....I don't have the money. It's not a matter of if. The fact is the seller will get one more payment from me and thats it. Not out of spite or anger....there is just not enough money in the bank.

Adam, I am not financially in a position to pay on this property for 3 or more months. So, regardless of what I do with the seller on paper, they will not be getting paid by me for more than this upcoming month. Another thing I was thinking of is just assigning my agreement with the sellers directly to this scumbag...for no charge. It would lower his payment by $250 and his option price by $20,000. Bottom line is I don't want to try and salvage this deal. I just want to cut my losses and move on. It has been a shitty deal from the very beginning, and I just want to put it behind me. The agreement with the seller is with an LLC and not with me. And the LLC has no assets. Sooo, there isn't really anything the sellers can get if they do decide to sue. I hate to be this way but I am not going to be the fallguy in this scenario. I can't and won't continue to pay on a house that I don't even own. If that means I have to pass this a$%hole off on the sellers....so be it. I can tell you one thing.....this has put an extremely bad taste in my mouth for sandwich deals. It will be a long long time before I ever do one again. I have been doing nothing but CAs and Pure Options since this thing strated going bad, and I like them much, much better.

I have a situation that has just gone from bad to worse. I have a T/B in a house that is behind 2 months. I hired a lawyer to have him evicted. Court date was today and he is now 3 months behind. A lawyer showed up on his behalf so he has decided to fight it and stay in the house. Unbelievable!!!! The next court date has been set for mid June....Yikes! That means 2 - 3 more months rent that I would be out...at a minimum...double Yikes!! I simply can't afford to do that. My question: If I terminate my contract with the sellers, (using paragraphs 21 & 23 in the Lease with Option to Purchase Agreement) do they just inherit my problems with this dirtbag or am I still on the hook somehow? Also, would they really be stuck with this guy? He would have no valid agreement under which he had a right to reside in the property. I guess the fact that he is still living in the house means that they'll have to evict him anyway to get him out? The obvious downside is that the sellers inherit a squatter in their home that they now have to evict....something I am sure they will not be very pleased about. They might even decide to sue me. I'm sure they will badmouth me to everyone they know. The upside is I am only on the hook for 1 more months rent....instead of 3 or more. This is a real mess and I could use some advice....quick. Michael, can you move this over to the legal forum if necessary? Thanks!

I have left blank contracts a few times when I have felt it was necessary to get the business. However, I converted them to a PDF format first, and then placed a watermark that spans the page diagonally that says "SAMPLE ONLY". It hasn't bit me in the A#$ yet.

They get whichever one comes to me first that is qualified and will put the most money in my pocket. The only danger in presenting both options to the seller at the same time is that they may say they are only interested in the pure option agreement. I basically overcome that by telling them...NOPE....not interested. I'm basically most interested in doing the CAs....and I let them know that. I add on the pure option if they are still interested in selling. Sometimes they are...and sometimes the are'nt. But the CA always comes first.

Hmmm...interesting. One other question. Lets say I send them notice today....and pay for May's rent. Does that still give me the ability/right to market the home for the entire month of May? And if it does, and I find a new T/B, can I then re-execute the original agreement with another notice/letter? I'm sure you can see what I am driving at.

Hmmm....so does that paragraph mean that if I send notice today, I owe them only for May's rent?

Doug, Lately I have been getting the seller to sign both the CA docs and the Pure Option doc. I basically tell them that I will be marketing the home as a "Lease to Own" but that I will also get callers that just want to buy...who are already pre-qualified. Most of the sellers I have dealt with would actually rather sell their home anyway. The thing I have found is that the "Lease To Own" signs pull in about 60% interested in lease to own and 40% interested in just a purchase. Even the lease to own callers typically want to know "how much" to just buy it. So, I just cover both bases up front with the seller. It has been working great that way. Either way, I'm looking for about 3%, so they (seller) still save money with me vs a Realtor. It is actually a pretty good pitch to use with sellers to get them to do the CA. Knowing that you could also sell it for them makes it seem like a no-brainer. Heck, I have even been getting them to sign blank Assignment of Agreement docs up front. It just makes it all go so much smoother. Hope this helps.

Michael, I did a sandwich LP with a seller last Dec. i filled the house in about 30 days but have since had to have my T/B evicted. I have been marketing the home with no luck so far. I am about to give up on this one. My question: Can I just call the seller back and tell them i can no longer afford to pay on their vacant house and cancel my contract with them? By the way, it was for 24 months and I used your contract...as is. Is there a weasel clause that will let me out of the contract? Thanks!

jmccade, My sign are 18"x24" yellow corraplast. I buy them blank, staple them to a wooden stake, and hand write the following on them (both sides) using a fat black marker: Lease To Own 3bed/2bath xxx-xxx-xxxx www.EzHomeHelp.com The phone number drives them to a recorded message. I don't answer calls directly from prospective tenant-buyers. I listen to the messages and call back the ones I am most interested in. The others go into a database and I call back when I have the time. I have found that I get more calls from the hand written signs but they also don't stay up as long. If you want to have a chance of your signs staying up longer (possibly all week) get the pre-printed ones that look like you bought them from Lowes/Home Depot. Just my two cents.

Doug, Direct mail to expired listings to find the seller. This took about 3 mailings over a 6 week period. Bandit signs to find the buyer. I put them up all around the area on Sat morning and take them down on Sun evening. Took about 2 weeks on this house...but it is a bread and butter home...always easier to move. Hope this helps!

Michael (and Kimberly), My buyer is doing exactly that. He is going to have the inspection performed first before we execute the assignment and pay me my fee. Thanks for the quick response. Yes Micheal, we are wondering if Kurt is going to be let go from the Rams. He is a great guy (goes to my church) and I, for one, will be sad to see him go.

I have an question about assigning a pure option: I have a pure option with a seller for $152,500. I have a buyer who will pay me $3,000 for the option. I plan to do an assignment of contract and collect the assignemnt fee. Seller knows this and is not only ok with it but is very happy to get his home sold. My question is this...and is really coming from my buyer. Is there any way for the buyer to get the $3,000 he is paying me to be counted as a down payment with his lender. He is qualified for a 95% loan so he will need a $7625 down paynt on a $152,500 purchase price. He was hoping to get the $3000 he is paying me counted towards that $7625. If not it is really like he is paying $10,625 down. Any ideas? Also, do I need to help with the purchae/sale between the buyer and seller after I do the assignment and collect the money? One more, what if the deal between buyer and seller fizzles out. Does the buyer have any rights to his assignment fee back.

Is doing a simple assigment the best way to handle a pure option? What documnet is used to assign a pure option? Also, what does the new buyer do once he has paid for and been assigned my pure option agreement? Does he execute a purchase and sale agreement with the seller? Thanks!

Gary, Where in Missouri (MO) do you live? It appears that you are a Cardinals fan. I live in St. Louis....hence the name.

Doug, Thanks for the feedback. How many deals has your friend done from the ad you mentioned? Mr. Saint, How many completed deals have you done from calling FRBOs? And what has the split been? Percentage % CA vs. Sandwich? Thanks guys!

I have never called "for rent by owner" ads from the local paper but and considering starting. Right now I am focused on only doing CA's. My question is does anyone feel that calling FRBOs would be a viable marketing method? Won't most of the ads be landlords? Will they be willing to sell? If they would be willing to sell, would they be more interested in a sandwich deal than a CA type deal? I guess I want to make sure I'm not wasting my time before I get started....given the fact that I am focused exclusively on CAs right now. Thanks!

Pilot, Another source is the 'Haines Criss+Cross PLUS Real Estate" product. It is a subscription service so you get a monthly CD rom with the latest updates. I think its around $500 or $600 per county per year. It looks like pretty slick software that lets you easily create mailing lists for mail merges into documents. The web site can be reached HERE. Hope this helps.

I also wanted to add the email address of the contact I have. She is really great to work with. Actually, here is everything again...all in one place so its easy to cut and paste if you so desire: Warnock's By Owner www.wbyowner.com Kristen Hansen Sales Manager, Investor Division 888-678-0905 x413 kristen@wbyowner.com Make sure to let her know you are an investor if you sign up.