Back in 2009 I wrote a paper warning of the risks of associated with Lease Options to both vendors and tenants who decide to rent with a view to purchasing a property via a landlord using a sandwich lease option method to control ownership of property.
Originally published on 17th October 2011. Re-published on 12th December 2013 having received two emails about lease options from unconnected readers in one day.
I first let to these tenants in 2003. They already had a daughter and later gave birth to a second. She was an accountant, I forget now what he did. They were model tenants but in 2008 I received a call to tell me that he’d left her for another woman. These things happen and as she had been such a wonderful tenant I had no issues whatsoever in granting a new tenancy in her name, no guarantor! Seriously, would you ask for a guarantor under these circumstances?
A few months went by without problems but then a rent payment was missed. I followed my procedures and wasn’t too concerned at first. After three weeks I called her at work and I was told she was off sick. I eventually tracked her down at home and she explained she’d been off for a few months and was really sorry about the rent. Apparently the stress of the separation was getting to her. Under the circumstances I agreed that she could miss another months rent payment (due at the end of the following week) and then catch up over the next 12 months when she get’s back to work. She didn’t go back though, not for long anyway, she’d hit the bottle and got fired for being drunk at work. I tried to help her but she ignored my calls and left me with no choice other than to serve a section 21 notice giving her two months to vacate. She was already four months in arrears so I could have served a section 8 giving her two weeks notice but I guess I’m just a softie. She’d been a good tenant for years so two months notice wasn’t too bad and I thought she’d get better and being an accountant she wouldn’t want debts hanging over her. I was wrong 🙁
No rent was paid and the notice period had expired but she was still there. I’d never been in this position before. What would I do? At this point I also found out that the children had been taken into care. This was getting nasty.
It turns out that she had also got into drugs, heroin to be exact, and was funding her habit through prostitution.
To cut a long story short we had to go all the way through the court process. It was my first time. It was only on the third attempt that the baliffs actually managed to get her out of the property. There were a ton of excuses for the first two times which I will not go into.
She knew she was going to be evicted and had completely trashed the property. My suspicion is that she got all the local druggies to collect all the bin bags off the estate and tip the rubbish in the house. The stench was over-whelming, three of the clean up team literally threw up, one refused to go back into the house. 23 skips were filled in all and I was down 18 months on rent. OK, I might have got away with a few less if I’d have been a bit tougher but seriously, would you have done anything different than I did as these events unfolded?
I learned two lessons from this:-
- You can never be 100% sure about any tenant
- You need a rainy day fund as you never know when a scenario like this could befall you. I’d been a landlord for 17 years and owned a massive portfolio before this happened to me but it could just as easily have been my first tenant in my first property.
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“I need to use grass cutting machine” said my Polish tenant when he called me one Saturday afternoon. You mean a lawnmower I said, don’t you have one?
“My friend say that you must provide” he replied.
Was he right? I’d let the house unfurnished, surely he should buy his own lawnmower? None of my other tenants with gardens had ever asked me to buy them a lawnmower. What a cheek I thought. I told him I’d look into it and to be honest I forgot. Continue reading Lawnmowers – do landlords have to provide them?
By 1999 I had realised that I needed to put money aside for maintenance. Tenants were moving in and out all the time and I was bleeding money on carpet cleaning, magnolia paint and replacement carpets at an unbelievable rate. I’d started investing into bigger houses and renting them to people with children and groups of professionals so the wear and tear was much higher. Remember, I’d also been furnishing my properties with cream carpets. When they got shabby it was difficult to find new tenants without replacing the carpets. Continue reading My first intentional property investment part 5
I remember several years back meeting an old farmer boy type landlord in the car park on my way into a Landlord Association meeting. He fit all of the stereotypes I mention in my blog about my first intentional property investment; you know, old, grumpy, HMO landlord, wearing a tweed jacket. Anyhow, he looked even grumpier this particular evening (barely possible!). All-right mate? I asked in my best Norfolk accent. No he said, bloody tenants! What’s up I asked, one of em’s dead he replied. Oh I’m sorry to hear that I say, wait till you hear this says the landlord. Continue reading The tragic story of an HMO tenant
Today I received a very sad telephone call to say that my tenant has died.
Having been a landlord since 1989 and built a decent sized property portfolio you might be surprised to hear that this is a first for me. You may also be a bit shocked that I really don’t know what to do. Continue reading My Tenant Has Died
Would you be sceptical of an advert for fee free letting?
Being a landlord for over 20 years has made me a bit sceptical so when I first heard about a fee free property letting offer my gut reaction was “what’s the catch?”
Continue reading Fee Free Property Letting
I’ve just been looking around Amazon and noticed that Robert Kiyosaki, author of the best selling book “Rich Dad, Poor Dad” (a must read for all property investors) has released a software based version of his Cashflow Quadrant game.
I’d be interested to know if any readers of property118.com have purchased this and what they think of it. Continue reading Must Read Books for Landlords and Property Investors
Isn’t it ludicrous that we can invest our private pension funds into ‘off plan’ Caribbean Hotel Developments but we can’t invest them into solving the housing shortage in the UK?
We have wealthy Greeks taking their money out of their failing economy and inflating London house prices by investing there and yet we can’t use our pension pots to invest into UK property. We are, however, perfectly entitled to invest into Holiday lets in Greece! Continue reading Private Pensions Could Help Solve the Housing Crisis
Mark Alexander Property118 Founder
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