Lease With Option To Buy Back
im buying a house thats in foreclosure for $270k the house is going for $470 i told the seller that he can rent from me for a year with the hopes that he can buy it back in ayear+a portion of his rent will be going towards that down payment my hope are that he falls behind or cant afford to buy it back have i opened a can of worms or should i give him an extra $60k and take less of profit and sell right away+plus he has no idea that the prop is worth $470k he could find out in a years time a cause me some problems please some help me
[addsig]
give him the 60k, be done w him...
check your private message.[ Edited by lp1 on Date 11/04/2003 ]
Be careful, we were told the house must mortgage must show a paper trail of being paid off. Otherwise the seller (who has rights) can convey they were forced or deceived into giving up their property. The equity in the home is theirs until it follows the legal closing process is the way we understand things.
If the closing occurs, you are the NEW owner and a L/O to the previous owner is OK.
We hope you are not confused, just be careful and obtain legal counsel.
Eric & Rosa
[addsig]
Keep in mind why he is in forclosure in the first place. If he could not make the payments to the bank, what makes you think he'll be able to make the payments to you? You could also get sued for usary if he get's ticked off and says you took advantage of him. In which case your deal is now a nightmare. Just pay hime for his equity and sign the deal when he moves out. Good Luck.
Sam
Generally,
L/O to the original owner is a BIG NO-NO. They seem to bite and bite hard when in a year they not able to get their property back because they have failed to leave up to the original agreement. If you feel you must do L/O then do it with a different non-qualifying person and make sure you take good down payment.
In our homeowner oriented society you don’t want to expose yourself to usury litigation. All sympathy of the jury will be on a side of the poor homeowner and you will almost certainly loose the case and may even go to jail. It’s better to get less profit and sleep well then rip a fortune of the deal and then wonder what part of it you should immediately preserve for a lawyer.
Dmitry.
I'm new to this, but my mentors won't close the deal until the previous owner is out! They even offer a moving truck to help them. They said it is too risky and after you've paid up everything, they might just stay...as previously stated, you might not have any recourse to get them out.
[addsig]
Reginald you sly fox.
In New York? This is where your judgement of human beings comes into play. You must read the present time owner very carefully. You must also create a transaction that is good for all parties. (Except any lurking real estate brokers) Hay that's me.
The rule I use and this rule is based on what in your opinion is the morality and the economic (true) condition of the property owner.
I take deed from him to an LLC. (arms length) I write him a lease with a reduced monthly payment below what he was paying at time of foreclosure. I cure the foreclosure. pay back taxes or set it up for a five pay plan, whatever. In the lease I give him an option to repurchase in one year to 18 months. I write him a letter agreement. In this agreement I agree to split any future profit on sale of the house, above expenses and advances.
I then monitor him and his actions for the next 12 months. If he starts to slip and slid, in conference with him I sell the property and cut him a check on close for one half the profit as designated. I shake his hand, hire the van and move him on to his next residence, an apartment.
Complicated, time consuming, and rather boring. I also watch him carefully and try to insert him into a new job or whatever he is capable of preforming.
Always I remember the nice man in the white suit and big furry hat. He managed the activities of about three ladies who did casual street entertainment. We had a consultation and he replaced his working staff with non users and increased his coverage by two blocks and excercised his option and bought back the property. A small profit. But a learning experience in street business.
A whole new world.
It works, whenever a bubble arises I am right there to handle it. In 40 some odd years I have had one law suit filed and that was dismissed with predudice and a kiss. The kiss, about $3,000 more, that bought him the car he wanted.
Strange are the ways of the human race.
Go Figure.
Querlous, Lucius
LUFOS I WAS WITH YOU UNTIL THE PIMP STORY!!!PLEASE TELL ME IS WHAT IM DOING DONE OFTEN? THIS GUY WAS IN CONTRACT 2 WEEKS BEFORE I GOT INVOLVED WITH $60K IN HIS POCKET ON A SALE I HAVE A CHANCE TO MAKE $100K +BUY DOING IT THIS WAY!! BEING MY FIRST DEAL DO YOU THINK IM TO AGGRESSIVE ANYONE CAN HELP PLEASE BEFORE I BLOW MY FIRST DEAL
If I was the seller I would do this deal in a heart beat. Then once you've bought the house and L/O back to me, I would sue you for usury lending and get my house back, cured of all default payments.