First lease option deal

[Will Sholy]

Hey Anyone and Everyone,

I wanted to tell people about my first lease option deal and the experience I had in case it helps anyone in similar situation or to lear from my mistakes.

I found a somewhat motivated seller through direct mail who owned a townhome in mid-town Ventura that needed quite a bit of work. He wanted to sell it and roll the proceeds into a 1031, but he didn’t want to invest the money to fix it up. His current tense at had been living there for 20+ years. ( I think, BING!! I have a solution for you Mr. Seller. We can lease option the property and sell it “as is” and still receive a good price.)

Anyway, he liked the idea so we set up the contract and I started marketing. I found a well qualified buyer within a few weeks. The owner excepted and he needed to notify his current tenant. We needed to give the current tenant, who wasn’t thrilled about moving by the way, a 60 day notice. I left it up to the seller to handle that issue believing he would.

Few weeks go by and I decide to touch base. The tenant is having issues finding a place. I didn’t think too much about it because we still had another month. So a couple more weeks go by and the tenant/buyer calls me saying the seller needs to push back the move in date because the tenant won’t be out be then.

So, come to find you the seller did not give the tenant notice in a timely manner which turned an unhappy tenant into a disgruntled tenant. On top of that the seller was impairment with her and making things personal so that made things worse. To move out by the new move-in date the tenant stated she wanted her full deposit back, the last months rent free, moving and storing expenses paid.

Needless to say, she had us. She knew that she could squat and cause a big delay and that we couldn’t do anything about it with the current COVID situation. We had to scramble to get things in line.

I ended up covering some of the cost with the seller (which I will not do again) to get things moving and get the tenant out in time.

Now that I went through this, I realize some of the issues that can arise with occupied properties and sellers who aren’t on top of things. I can’t rely on anyone to get done what needs to get done in a certain time. Also, I will try to avoid being caught up in a landlord/tenant feud.

Overall, it was quite a headache, but a great learning experience. I learned more in this first deal than I have in the last year of studying REI.