Bi-weekly rent/option payments?

[neill]

Hi all - we are working with a client that gets paid every two weeks, and he is on a reasonably tight budget.

Can anyone comment on (assuming the lease/option contracts are worded correctly) the pros/cons (or if even possible) to collect rent/option every two weeks to align with his pay-cheque?

Max budget currently is 1500/mo, and we really need 1625 to make the numbers work

If we collect 750 bi-weekly, that equates to 1625 per month and the tenant buyer will likely be happy with that


Thoughts?

Thanks in advance!
Neill

 

[marcp]

That will be a lot of post-date cheques!

But if it works, why not?

Maybe look into setting things up with electronic fund transfers.

Cheers.

 

[jseib]

I would be concerned about the tight budget.. This client still has to cover utilities etc and your already $125/month over his "max" by playing with the numbers to make them sound better..

I would take a very close look at his "budget" and make sure he has the resources to cover all these expenses.. From my experience if you squeeze someones budget to hard and for to long eventually they go out and buy themselves something because in their mind they`ve been saving so long and they deserve something.. Last thing you probably want is to find out your tenant buyer bought himself a new home theater on a brand new credit card 3 months before the option comes up.. Or to pull up to his driveway and find a new F150 parked in the driveway..

 

[neill]

QUOTE (jseib @ Feb 15 2010, 01:04 PM) I would be concerned about the tight budget.. This client still has to cover utilities etc and your already $125/month over his "max" by playing with the numbers to make them sound better..

I would take a very close look at his "budget" and make sure he has the resources to cover all these expenses.. From my experience if you squeeze someones budget to hard and for to long eventually they go out and buy themselves something because in their mind they`ve been saving so long and they deserve something.. Last thing you probably want is to find out your tenant buyer bought himself a new home theater on a brand new credit card 3 months before the option comes up.. Or to pull up to his driveway and find a new F150 parked in the driveway..


Hi jseib - thanks for the thought starters.... always good to have additional perspective. I really appreciate the note on "eventually they go out and buy themselves something because in their mind they`ve been saving so long and they deserve something...."

We definitely will spend some time in discovery and qualifying as far as his TDSR goes - the good news is that he has good income - last year was 80k or so gross, and a mid 6 truck pmt already. He has also been in touch with a mtg broker that tells him he is on the way...

We had some initial conversations with him regarding budget and pmts - it is def our desire to make sure that he is not over-stretched in the situation - leading to a lose-lose, not a win-win.

Quick math: 6500 gross @ 40% TDSR = 2600 debt pmts - at 650 for truck and a couple hundred on another loan, he is safe

(Now all these numbers need to be verified.......)


Will let you all know if it works out... this house represents our first post-RLG contract (it is an option only at this point.... and it kick-started what might be a 5 contract month!)

 

[neill]

QUOTE (marcp @ Feb 15 2010, 10:56 AM) That will be a lot of post-date cheques!

But if it works, why not?

Maybe look into setting things up with electronic fund transfers.

Cheers.

Hi Marc - thanks for the note - we were def thinking of EFT/PAPP - same day as the cheque hits the bank - assuming he is on auto-deposit.....

Neill

 

[Shaune]

I have a RTO that I collect bi-weekly payments on. The post-dated cheque thing is no concern as I fill out a form at the bank (TD in this case) and give them all the cheques at one time for them to deposit in my account as they come due.