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baldona
Auburn Fan
Florida
Member since Feb 2016
10253 posts

re: Major issue with a tenant and I need advice
Sure, but he lived there 7 months now for free. I don’t understand how you landed back at the full $4,000. Your father also cut the power off to him, so he was asking to be verbally abused.

You could evict him and it take a month or 2 but keep the $4,000. That’s a better financial decision then this.


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stout
Arizona Fan
Back in God's Country
Member since Sep 2006
139912 posts

re: Major issue with a tenant and I need advice
quote:

You are still just as pompous, arrogant and miserable as ever, Stout. Don't change.





Whoa now...I am not miserable


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24
buckeye_vol
Ohio State Fan
Member since Jul 2014
31862 posts

re: Major issue with a tenant and I need advice
So I’m confused as to how either party would not even make an agreement on a napkin for a deal of this importance.

But I think it’s especially insane from a buyer perspective because the risk and consequences, particularly the risk of getting scammed, are disproportionately greater.

Whether it’s willingness, ignorance, or apathy, taking on that risk is by far the biggest red flag to me.

Of course, I have the advantage of hindsight here, but after having people who did not own the home attempt to scam us for rent (house in Nashville; vacation rental in Key West) after just brief inquiries outside of more formal means, I would be considered about the seller’s legitimacy to make the deal, let alone his trustworthiness to abide by it without formal legal documentation to protect himself.

In other words, I know I’m trustworthy, but I also know that another person cannot know that, even if they believe it. And because I cannot know whether they’re trustworthy either, then I not only expect both of us to protect ourselves, I would be concerned if they didn’t.


Janky
LSU Fan
Team Primo
Member since Jun 2011
27062 posts
 Online 

re: Major issue with a tenant and I need advice
If you are going to write him a check I would get him to sign something saying he will vacate. Don't just go verbally again. Of course I say this in jest.


buckeye_vol
Ohio State Fan
Member since Jul 2014
31862 posts

re: Major issue with a tenant and I need advice
Maybe this has been answered and I missed it, but how does the OP even know the guy is even alive, let alone actually living there?

I mean the amount excuse for not having him sign a formal agreement was that the OP never expected him to not answer his phone calls. Interestingly he doesn’t mention another easy and viable option: going to the house (whether the OP, his father, or anyone for that matter) and knocking on the door or at least waiting for him to leave, like serving a subpoena.

But if there has been no contact and now no power, maybe it’s possible the house is vacant and/or the buyer has passed away.


hungryone
LSU Fan
river parishes
Member since Sep 2010
9511 posts
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re: Major issue with a tenant and I need advice
quote:

But if there has been no contact and now no power, maybe it’s possible the house is vacant and/or the buyer has passed away.

Or skipped town, months ago. Even in a lease purchase situation, the la lord has the right to enter to inspect the property or perform maintenance. Why didn’t Pops knock on the door and see if anyone answered, under the standard nosy landlord premise of changing the AC filter? If you’re worried about finding something clandestine, knock, leave a note that you’re returning at X time, and come back then with a witness, and a locksmith, if necessary.

I don’t get the passive move of switching off power without ever trying to make contact in person with whoever is or isn’t living in the house. Does OP not have any references on the tenant? His workplace/employer, his mama, etc? I can’t imagine that OP agreed to a rental or owner financing without knowing SOMEthing about this guy. I’d at least want to know if he’s employed before he moves into my property, rental or purchase.


PearlJam
Auburn Fan
NotBeardEaves
Member since Aug 2014
11848 posts

re: Major issue with a tenant and I need advice
quote:

No paperwork was ever signed
Dumb.

quote:

My dad gets the bright idea (sarcasm) to turn the power off on the house which is illegal
also dumb

Go through a formal eviction process and get a judgement against him for damages to the property. Based on his behavior in ignoring you, there is a chance he never responds and you get a default judgment. You'll end up losing out on this deal, but any scheme you devise to try to avoid taking your medicine will probably be more costly in the end.

ETA: also don't listen to these slap dicks telling you to lie about the owner financing. Your buyer is in default regardless of the nature of the transaction, which likely violates the statue of frauds anyway. Get competent legal advice from an attorney that deals on real estate litigation matters. You have equitable remedies available even if contractual remedies fail.
This post was edited on 9/6 at 10:06 am


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buckeye_vol
Ohio State Fan
Member since Jul 2014
31862 posts

re: Major issue with a tenant and I need advice
After researching owner financing and tax implication, I’m generally curious why you chose that instead of either (A) a typical sale where you end up receiving the full amount, (B) renting it out, giving you a monthly income while retaining the appreciating asset.

Based on the information you provided ($4000 down payment, $800 monthly payment) payment, that would equate to a $132,000 total sales price, with a 6.4% interest rate for a 30-year loan, or $100,000 sales price with a 5.8% interest rate on a 15 year loan.

So from my research, you would pay taxes on the interest at the ordinary income rates on an amortized schedule and capital gains on the difference (if any) of the sale price and the original purchase price divided by the length of the repayment.

After running the numbers, I’m struggling to see how this would be preferable than either the full sale or renting it out.

Compared to the full sale, you probably did not have a significant amount of capital gains on the sale that would benefit from being able to defer and split the gains across years. And the interest income will be taxed at ordinary income rates, which are potentially, if not likely, much higher than long term capital gains rates, and will be higher initially with an amortized loan, with a higher tax liability.

And compared to rental income, while you have fewer expenses (insurance, property taxes, maintenance) and $800 is probably higher than what it could rent for, the payments are fixed at that price, with their real value diminishing with inflation, whereas rent increases could keep up with or even outpace inflation. In addition, with the rental you would still have the asset, and a likely appreciating one at that.

Regardless, while I don’t see how you could make the sale without a written agreement, in the first place; however, it makes when less sense given the tax implications and calculations (capital gains, interest amortization, taxes on capital gains, taxes on interest).


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Fat Bastard
Atlanta Braves Fan
Member since Mar 2009
41708 posts

re: Major issue with a tenant and I need advice
quote:

After researching owner financing


i have explained it before but won't go through it again. in short:

owner financing can be helpful to the buyer AND the seller. there are pros for each side(unless you frick up like the OP). circumstances play a huge part of why and when this is done. if you actually researched this you should know the answers. you are looking at this from one angle while missing many others.


buckeye_vol
Ohio State Fan
Member since Jul 2014
31862 posts

re: Major issue with a tenant and I need advice
quote:

I don’t get the passive move of switching off power without ever trying to make contact in person with whoever is or isn’t living in the house.
Besides the potential legality of that, doesn’t it imply that the OP failed to fully transfer ownership? How can a person who does not own an asset, have the ability to control of a service/utility/product that is provided for the owner’s use of that asset by a third party altogether?

I mean if the OP inexplicably provided no written documentation or agreement, retained rights to the home’s utility, was there even a transfer of the deed and documentation provided to the county recorder?

I didn’t officially own my home and couldn’t move into it until those basic documents (plus a bunch of others) were completed. So how can a buyer be expected to make payments on a loan for the ownership of an asset, if he doesn’t yet own the asset?

I’m beginning to think that the OP has failed to meet more terms of the agreement than the buyer, (he at least paid $4,000).

It almost seems like the OP is a scammer here. Get someone ignorant, desperate enough to “verbally” agree to a $4,000 down payment and $800 a month for the ownership of the home and not actually transferring the rights to the ownership of the home in any official capacity (government, utilities, etc.).


So the only proof of the terms, is the word of the two parties. And it looks a lot more like a rental agreement than a sale, with a $4,000 security deposit and an $800 rent payment.


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buckeye_vol
Ohio State Fan
Member since Jul 2014
31862 posts

re: Major issue with a tenant and I need advice
quote:

if you actually researched this you should know the answers. you are looking at this from one angle while missing many others.
quote:

(unless you frick up like the OP)
And if you had actually read my post, you would see that given the information the OP provided, I was questioning the benefits in his circumstances.

I mean if he was selling a $400,000 home, with $150,000 in capital gains, and requiring a significant down payment, with relatively short repayment schedule with a high interest rate and/or with balloon payments, it would make a lot of sense.

But given that it’s allegedly a “nice” house, but with only a $4,000 down payment and fixed $800 monthly payment and no documentation, there is unlikely to be a significant amount capital gains on the sale, a short term repayment, a significantly high interest rate, and/or any balloon payments.
This post was edited on 9/6 at 1:18 pm


baldona
Auburn Fan
Florida
Member since Feb 2016
10253 posts

re: Major issue with a tenant and I need advice
quote:

And if you had actually read my post, you would see that given the information the OP provided, I was questioning the benefits in his circumstances.



You bring up a good point about the utilities. I'm assuming OP fricked that up also. The main benefit of an owner financed deal is all the responsibility is moved to the buyer and the owner only collects a check. Most are written in terms that are extremely beneficial to the seller, so if the buyer misses just one or maybe 2 payments the property is re-assumed by the seller along with all payments.

You will have to verbally ask the OP what his conditions were.


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tigereye58
LSU Fan
Member since Jan 2007
2020 posts

re: Major issue with a tenant and I need advice
I had a similar example with a basic renter.

I had a tenant give me a 30 day notice she was moving out. Everything seemed fine until the tenants sister was living with her and decided to stay. She was pregnant so I handled it very carefully. But like you I had not written agreement with the person. She had never given me any rent money. She did state she wanted to stay but I screened her like I would other tenants and she had no job so I declined and asked her to leave. She didn’t so I filed for eviction and we both went to court. The Judge ruled in my favor and asked me why I just didn’t file trespassing charges.

So with that I would call the local sheriffs office or Marshalls office and get some advice from them. At a minimum just file for eviction and let the court process remove him. If he no shows it’ll all be fine. If he shows the judge will probably try and mediate the situation at which time you can offer 1K for him to leave and call it even. If the judge sees you trying to work things out he’ll probably rule in your favor regardless.


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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
14683 posts

re: Major issue with a tenant and I need advice
quote:

So I’m confused as to how either party would not even make an agreement on a napkin for a deal of this importance.


Think about the next vehicle you may buy and what you will pay. Divide than number by 2. That number is a typical ILB house. The folks interested in those types of properties need special arrangements which ILB accommodates and makes money off sale as well as financing.


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Rust Cohle
Baton rouge
Member since Mar 2014
1154 posts

re: Major issue with a tenant and I need advice
Man, I have found myself in a similar boat after finding out the justice of the peace would not see a Lease Purchase. What state?

The power is out right? If the tenant has moved out most of his belongings, then he has abandoned the property, and eviction is not needed. Any litigation would have to be initiated on his part and would most likely take money that he doesn’t have.


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Double Oh
Louisiana
Member since Sep 2008
8753 posts

re: Major issue with a tenant and I need advice
Legal or illegal im turning the damn electricity off plain and simple and the water. Fuk that dude


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HailToTheChiz
Auburn Fan
Back in Auburn
Member since Aug 2010
31588 posts
 Online 

re: Major issue with a tenant and I need advice
quote:

Delete this thread. Go home, shoot him. Call the police and say you came home to an intruder who attacked you.

Problem solved.




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