Making the foreclosed your tenant?
I know somebody that is going to lose their house to foreclosure but they really don't want to leave (they are older).
would you buy the house at the foreclosure price and then sell it back in a lease option at a higher price?
This is not that uncommon of a practice. However, it would totally depend on your "new tenant's" ability to even pay the lease.
If they fell behind on their mortgage, what assurance do you have that they'll be able to pay the lease? Is there any equity involved which could be used as part of the deal to help them out? If so, have you thought about requiring them to use some of their shareof the equity as sort of a "Prepayment" on the lease to keep the monthy lease amount down?
This situation, like most, completely depends on how far they are behind in payments, equity involved, what their needs are, etc. But, to answer your question, YES it can be done.
You might want to look into the use of a Title Holding Trust/Equity Holding Trust for this transaction. It is much safer than a standard L/O and your "tenants" will be able to retain the tax write-off, maintenance responsibility, and continue to share in the future appreciation of the house. Just a thought.
Hope this helps.
[addsig]
Hello Dracdc40, Well it is like this, if you don't someone else will. Ask yourself if you could evict these people if they could not pay once you took over. It is hard doing business with family and friends.
KEA and Vern are both K-Rekt!
I wrote and Article here on TCI titled:
"How to SAFELY Lease a Home Back to Pre-Foreclosure Owners?"
You should have either:
A 3rd Party Collector (e.i. a Loan servicing Co)
or
A 3rd Party Trustee if you decide on doing a Land trust transaction.
This is to ensure nothing PERSONAL gets in the way of you COVERING YOUR ASSets!
Hope this Helps!
DERRICK ALI
[addsig]
Thanks for the great tips! The info about trusts will come in handy in this deal. Also, I like the part about using a collector. The sellers will need any equity they have in the house to pay off their 20k debt in credit cards.
Thanks again.
Derrick,
I have searched everywhere on this site and can't find the article mentioned. Any chance of posting a link, or e-mailing it?
Thanks,
Clint
cmiller@loadmail.com