SUB 2 Lease Back To Owner
I know this is not the most favorable topic, but i have a deal where we can take the property SUB2 and then lease it back to the owner, i'm just not too sure how to structure it, and how to make money on it. I'm really just going to broker the deal for another investor buddy of mine with much deeper pockets then me. But i want to make sure it's set up as a Win/Win/WIn. For me/seller/investor. Can anyone lend a hand on how to stucture the Lease and buyback option or placing a second mtg. on the property? What's the best angle on a situation like this?
Run. Don't do it!
You could get sued for usary. Other posts were made on this subject. Look into it.
Offer to help the owner find a new place to live and even offer to pay for moving costs or lend a hand to help move boxes or such. Don't talk down the house but you can sound excited to help them find a new place to live.
TT:
Can they afford the pymts + new note to your Investor Buddy?
Why did t get into trouble to begin with.
How do they plan to avoid a simliar scenario with Investor Buddy?
IMHO if they CAN AFFORD the Payments then work it out through a Title-holding Land Trust
Begin wth a simple Declaration of Trust with the Owners as the sole-Beneficiary(s)...
Then afterwards have the Investor Buddy be (silently) assigned as a co-beneficiary in the Trust.
This PRIVATE Arrangement whereby a Percentage of Interest in the Trust
A$$ET (the property) is assigned to the Investor buddy by:
MUTUAL CONSENT (agreement) of ALL the BENEFICIARIES(the Sellers)
This can definitely help you to avoid the USERY and EQUITY-SKIMMING issues!
WHY???
The TRUSTEE will Technically OWN THE HOME!!!
(Legal + Equitable Title holder of Trust Property)
And NOT Investor Buddy!
Also, HOW and WHOM gets Fined or Prosecuted, Sued etc. when the homeowner hired a Trustee to take Title to the Home IN TRUST for THE BENEFICIARY'S BENEFIT???
You Can't sue yourself in any court of law that I know of!
Try This and let me know if Your Investor Buddy needs help with strutcuring the deal!
I hope it Helps!
Derrick
THAT..........is cool. hmmmmmm
Do not do it. A friend bought one a year ago sub2 trying to help another friend by being a partner in the deal. He put up $5500 bucks to bail the lady out. She is now behind again and they have not been able to sell the property or get her out. At least they are not on the hook for more losses but $5500 is a lot of cash. I know she wile file 13 and live there as long as possible for free.
Good LUCK and HAPPY HOLIDAYS
Hope this helps some
Ted Jr
Do not lease it back to the owner! If they couldn't pay before what makes you think that they will be able to pay later. Get them out of that house, even try putting them into another house you own before letting them stay there.
From what I understand it gets sticky going in front of the judge when the seller says " I thought he was just loaning the money" or worse yet a "gift"!
You can't go in front of the judge and say
"I stole it fair and square, just look at all the paper work..."
Be careful!
What Derrick Aii suggests will work. I've done it a few times. I'm just not interested in doing it again. Inspite of the fact that the resident/beneficiary " evicts himself with this technique--you will have much weeping and gnashing of teeth. The lessee has no cash you can use as a contingency fund when they default on their lease payment which is almost a certintude.
everyone is leaning towards the cons, call me an optimist, but is there anyone out there that can tell me the pros, and share some positive experiences on this subject. or is it all problems?
looks like a duck
walks like a duck
quacks like a duck
must be a duck
Derrick Ali gave you a real good pro, and I've seen a couple others up there. It's just that it is better to have them out of the house and move them somewhere else. and it just makes more profitable sense to do it that way to.
For those of you that do lease back to the owners, do you get a deposit from them???[ Edited by nebulousd on Date 12/03/2003 ]
Derrick isn't an Allstar for no reason, the man know his stuff. In dealing with Owner's there are more that want to stay, then want to sell. So, i figured if i tapped this market i'd be taking a big risk, but i've always learned big risk big return. Although, this situation seems like it may be the anomoly.
toeneetee4,
If you are looking for hard core risk then you have it in the deal you described.
Let's put it this for all those where the owner wants to stay in the property who is in trouble.
Call any major lending institution, ask them why if a person can't afford the loan albeit credit card or whatever, they proceed with foreclosure or court action and not just say "Ok let's start from scratch forget about that you couldn't pay, I know you can pay us now." Maybe all the companies operate with a sound business plan, do you suppose?
You can certainly buck tradition, however do you have the where for all to cover your convictions (risk).
John $Cash$ Locke
John, definitley the truth. Although, there are situations where the back payments get very burdensome, and returning to a regular scheduled payment is much easier to swallow. So, you're saying the risk is getting the homeowner out, correct? Because, finacially it makes sense if there is equity in the property to cover the backpayments and even eat the rent payments for a few months while the Owner/Tennant evicts.