Hi there
A bit of background: we have an investment house, nothing fancy, owe 80% on it, now maybe a bit less due to lower markets.
The tenants are pigs (sorry) the place is trashed (sad face), we could kick them out, re-renovate the place, but again due to the market we would not get the same rent again.
They pay rent on time (almost)
I want to sell it to them, via vendor finance, but I'm pretty sure their situation is that they will "never" get proper bank finance…
How can I vendor finance this?
Or should I just have a good fire insurance and pray (that nothing happens and they stay for ever)
thanks
If they are poor tenants, I wouldn't consider selling to them under vendor finance.
I agree with Matt
What happens if they don't make payment then you have the same issue just kicked the can down the road a little.
Get them out, retain the bond if you feel justified in order to put the property back to a state it was when they first rented it and go from there.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I wouldn't sell to the current tenants via vendor finance terms unless you can get a really big non refundable deposit if they don't pay the mortgage and decide to vacate.
Thanks.
EngeloRumora | Ohio Cashflow
http://ohiocashflow.com/
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Course depending on which State the property is located in taking a large deposit off the purchasers may cause you more problems than it is worth.
Legal consequences of such.
Always consult a professional before under doing anything.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
What are you trying to achieve by vendor financing the property? I ask this because their are various stratergies to het the result you are looking for.
Care to elaborate James??
ChrisA1
Persistence is 'to keep on keeping on, no matter how hard the going may be'
I wish we had the tenant bond here in the states. Owner financing can makes sense on a couple of levels. I have alot of partners here who offer owner financing as a short term option. The tenants put up extra cash as "option" money – usually $5 or $10k that gives them to option to buy the property within a certain time frame usually a year or two. Some will give them a credit of some amount for each month they pay the rent on time. 99% of the time they never actually buy the property. My one friend has multiple renters who have ended up paying multiple option fees but never bought the property. It just boosted his returns.
Just check into the laws in your area to be certain this approach is legal. I doubt the tenants will be any cleaner for you but the option money will make it less painful to clean up after them. In GA, it's super easy to foreclose if you do use owner financing, which again usually works out to just be rent. If you decide to go with owner financing as opposed to options, make sure you determine how hard it will be to foreclose on them and the costs of doing so before entering into any agreements with them. LUCK!
Bought with Equity, foreclosing on a property which has been sold thru Vendor Finance I.e Installment Contract, Deposit Finance is not quite that easy.
Firstly being a Credit contract you need to be Licensed to offer such a product and then it falls under the NCCP legislation.
This is exactly the same legislation which standard High Street lenders are governed by in regards to default notices, repossession etc.
It is not a matter of merely asking the buyer to leave because he has missed a payment.
A Call Option agreement is something totally different so make sure you get proper advice before undertaking such an arrangement.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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