All Forum Posts by: Len Roche

Thanks Deanna for the security deposit advice, also a mutual lease termination fee will help with vacancy as I get this re-rented. That is a great idea.

Thanks Winford, I have reached out to the husband. No word from him yet. 

After all your great responses here are the three options in am considering: 

1. Let the "wife" leave and have her name removed from the lease with approval from the husband. Have the husband continue on the lease till the end. In this scenario I am worried about the husband not paying due to financial burden, especially if there are legal fees.

2. End the lease for both parties if they choose, and include a early termination fee. (50% to 100% of rent). Bonus is that we will have a favorable rent window in the spring as supposed to November.

3. Leave the "wife's" name on the lease for liability reasons in case the husband does not pay. As in option 1, I am worried about non payment of rent as both their money is used in a legal battle.

Our goal is to quickly stabilize the situation when it comes to rent payments and house integrity. 

I agree Linda, my goal is to get this property rented and stable as quick as possible. I am seeking advice regarding pittfalls regarding and his to avoid them during these tricky times. I doubt I will hire a lawyer, unless they pull me into their unfortunate situation. As you said I am pretty much on the bottom of the totem pole as they fight each other, and so they probably won't involve me. 

I am strongly considering letting them both go if they want, and re-rent the home to other tenants. A bonus of this is, is a better rental window in the summer as supposed to November.

How should I proceed with the security deposit? I was going to ask them who wants to get it. If they can't agree I can then split it in half and send it to both.

I'm sure this will change. But as of last night, the wife told me that the husband was willing to stay till end of lease. She wanted to take her name of the lease and give him full responsibility. She says he's agrees to this, but I have not had him verify this.

My lease does not address this. It has a typical lease breakage clause and the corresponding fines. It does not specially stipulate what happens in a partial breakage. As of now, the intention is carry out the lease to fulfillment on the husbands end.

Hello!

Long term tennants are going through a separation (4yrs). The wife wants to move out with the children and have her name of the lease. There has been a lot of fighting and she wants to move out at the end of this month. I have contacted my lawyer to help with this situation and what my options are. Should hear back from him soon.

Has anyone experienced this before and what did you do? What was the outcome? 

What are the pittfalls that I should avoid?

I am concerned about rent and utilities not being paid due to legal battles. I am also concerned about fights over security deposits and any damages that may come out of it. 

Thanks for the advice.

Len Roche

Hi Adam,

Personally, I keep $5000 in a checking account which handles the day to day transactions. Anything over that gets put into a high yield checking account through our local bank and earns us 2%. 

You can also use an online bank like Synchrony or Ally and get something close to 1%. But these are savings accounts so there are restrictions on the number of transactions per month. These returns are quite pitiful compared to the stock market, but the money is secure and easy to access in a pinch.

Hope this helps! 

Len Roche

The Queen Bee of RE that's awesome!

That's wonderful! Anything that shows your passion is a great idea. I'm thinking about it now, you may even get the reputation as the bee lady. Definitely a sticking point. Very unique and hard to forget.

Both ways are hard to pull off, but are worth it if your are strapped for cash. Getting a partner is a good idea if done correctly. They need to compliment your skills and attributes, have integrity, share your goals and motivation, and in your case, be willing to risk their money for the investment. 

Starting a partnership should not be done lightly, if there are cracks in the union it could pose a lot of problems down the road, especially when you hit a bump in the road. Don't let this deter you though, If done correctly, your work load will hopefully be halved and it would be easier to scale up as you will now have cash for your investments. Just keep in mind, if you enter into a partnership you also have to give away a piece of the cake at the end of the day. But half a cake is better then no cake at all.

Another note on banks and LTV, you can still get higher than 80% LTV using the seller as a second position. It's not conventional, but that's why it's called creative financing. Banks that sell to Freddie Mac and Fannie May will not allow this. Talk to your local banks and credit unions. They will give you better rates, keep the loan on their books, and be more willing to go higher than 80% LTV. Let them know ahead of time, so you don't waste your time and theirs.

Good luck!

Very few banks allow less than 20% down, most won't do less than 25%.

If cash is really a problem, you may want to ask the seller for owner financing.

Otherwise, ask the owner for a second position loan for part of the down payment. That way hypothetically, the banks covers 80%, Seller covers 15 to 10% and you cover the rest. You will then have to pay two loans, and the bank may weigh this as a negative in your mortgage application. 

In both cases, the seller's loan will most likley be at higher interest rate then the banks loan.

Owner financing may be hard to get, but it doesn't hurt to ask and is worth it if you are short on cash for a down payment. Just make sure your bank is OK with it.

Good luck!

Very few banks allow less than 20% down, most won't do less than 25%. 

Other than a FHA loan, you may want to ask the seller for owner financing.

Otherwise, ask the owner for a second position loan for part of the down payment. That way the banks cover 80%, Seller covers 15 to 10% and you cover the rest. You will then have to pay two loans.

In both cases, the seller's loan will most likley be at higher interest rate then the banks loan. 

Owner financing may be hard to pull off, but it doesn't hurt to ask.

Good luck!