Lease defaulting tenants or buyers don’t necessarily leave quietly. At times, they fight the eviction and go into court yelling, “I HAVE A RIGHTFUL INTEREST IN MY PROPERTY!” What they are stating is that the lease isn’t a tenant-landlord interrrelation, but preferably a buyer-seller interrelation. In case, the judge agrees, your lease is rearranged as an installment plot agreement. And this can order you to foreclose your tenant, not only evict him.
Here are some tips to avoid the rightful mortgage:
- Make Your Period Short. Don’t let tenants more than one year lease at a time. If the tenant wants three years badly, give him a one year with 2 renew opportunities. In case you provide a cumulative rent loan, raise the buying value each time.
- Pay the Insurance and Taxes. Don’t allow the tenant pay the insurance coverage and taxes.
- Watch What You Say. In the agreements you sign, don’t use such words, like “buyer”, “seller”, or “credit”. Instead of them, operate the words “tenant”, “landlord’, “non-refundable option.”
Sell Your Lease Option for Capital Growth Attitude
If you lease, and then sub-lease, it’s called a “sandwich.” When your subtenant wants to purchase, you “buy and flip” at the same time. This income is imposed as usual profit. If you handled your option for a period longer than a year, you can qualify for capital growth attitude. In place of selling your property, sell your lease option and allow your subtenant perform it straight from the possessor.