Lease Back?
Hey guys-
Got a couple deals going where I have a homeowner either about to go into or is in foreclsoure. They are able to make their payments (they got sick and fell behind, but can make each payment easily now- and I verified it all). They just dont have the reinstatement amounts due to stop the foreclosure. I am doing a Lease Back with them- they sign over the house (or I 'purchase' it from them), take out a loan completely in my name, and allow them to live there as a tenant with an option to buy as soon as they can fix their credit enough to do so. Might only be 6 months. They buy it back from me at full price. Financially, the #s make sense.
I ran the deal through my lawyer. He ok'd it all and said to make sure I get Purchase Agreements on both sides, so it's clear that I BOUGHT the house from them and SELLING it to them. I am also leasing it back to their boyfriend, relative, etc, so that it's not in there name specifically during the lease period. I want to make sure I'm not doing anything even remotely questionable or illegal here. It's my understanding that Lease Backs can be bad if I do them SUB 2- which Im not- Im taking out loans in my own name and paying theirs off in full. Another concern I have is in 6 months when they're capable of buying it back from me, and the pressure of a foreclosure is now off their backs, that they stand in front of a judge and tell them this sob story, and how they didn't know they were losing all their equity just for me to help them out for a few months.
So- my concerns are the overall legality of this, and, a judge feeling sorry for their pitty party and me losing the deal. Any pointers or insights on this?
Thanks!
AZJ
Since I see you are in the same City as I , I will only tell you 1 thing. Most Homeowners facing foreclosure want to keep their house. I have had experiences with this in the past, and all Lease backs, rentals, options have failed. I always looked out for #1 (me) and then my dead beat tenants. I know the tenants will tell you ........they lost their job, the spouse split, I was laid off. I have heard it all before, what makes you think that if they couldn't pay their mortgage before, they can pay you rent now? That's just my 2 cents, but when I purchase a property the first thing that goes is the previous tenants and-or owners.