Steve D. Valentine describes a lease-purchase deal where a single mother put down $50,000 on a $250,000 house, then stopped paying rent after one month and moved to Mexico. The team evicted her, kept the renovated property, and are now selling it for $395,000, expecting an $85,000 profit.
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They actually— the tenant didn't make her second lease payment after she moved in. And then a third. One of my team members, a client that came to us for creative solutions. She couldn't buy right now. She received a settlement from a car accident and she really wanted to get into something. She was hell-bent on doing it to get her daughter settled in high school. We bought this house for $250,000. And she put $50,000 down. She had a locked-in price for $425,000 at the end of 2 years. She was qualified based on where she had to get to. She had to clean up some credit things. So, we went to work. We did a lease purchase. We did the contract. And then my wife Wendy, our contractor came in and remodeled this to her likings. And she moved in. And 6 months later, we had to evict her. And here's why that is so terrible in my heart. And I hate being that person. But this is a non-emotional thing. They committed to the opportunity but they didn't follow through with their thing. They actually— the tenant didn't make her second lease payment after she moved in. And then a third. Like, oh, well, she's single mom. Like, let's give her opportunity. The management company gave her the opportunity to catch up on her payments. And then my wife saw pictures of her in Mexico and doing other things. And that was it. So, we saw it on Facebook how she was living. We were still paying the mortgage. She was living fine. So, we ended up having to evict her. Which sucked. It really did. She ended up forfeiting her $50,000+ and we ended up with a renovated house back from the lease purchase. And then we kept it a couple of years as a rental. And now, we're going to sell it. And the house is for sale for $395,000. So, at the end of the day, it's going to work out really well for me because basically, I didn't pay for the renovation in here. And we'll probably net somewhere around $85,000 when it's all said and done. And the good news is for us is we can 1031 exchange and not pay taxes on that and move that to the next rental.
