Posted by roundhouse on December 19, 2002 at 21:54:28:
If they couldnt afford the $500 mo payments, what nakes you think they are gonna pay $700 a month for the same house?
not gonna happen. not for long anyway
Ever lease back to a foreclosed owner? - Posted by Ike
Posted by Ike on December 17, 2002 at 22:55:11:
Should I even consider this as an option when dealing with owners in foreclosure? I am finding that if they aren’t interested in selling to me they are definitely interested in a private loan and a lease to own scenerio if I bail them out.
The thing is, if they can’t pay the bank how are they magically going to be able to pay my lease payments??
Then again if they can’t afford to pay me then I can evict them and get their house, right? Seems like an unethical way to get someone’s house…
Re: Ever lease back to a foreclosed owner? - Posted by jon CA
Posted by jon CA on December 18, 2002 at 17:42:54:
Ike- I have succesfully leased back the home I just purchased in foreclosure to the owner/seller for a very short period of time. although most here would advise against it. when I find an owner in foreclosure I ask all of the pertinent questions on what they need. if one of them is simply a place to live until they find somewher to go, I will write it in the deal to lease the home back to them for a max of 3 months until they figure it out. it has worked for me as I have run into no seriuos consequences.
Not on my life - Posted by Eric - GA
Posted by Eric - GA on December 17, 2002 at 23:43:42:
This is illegal in most states. It’s viewed as predatory lending. In many cases if you even allow the person to stay in the house 1 Day after you close with them on the property, you have already crossed a legal boundary. Plus, even if its not illegal in your state, if you end up having to take the house back (which you will, in every situation), then you are going to get slapped with a huge lawsuit because the owner “didn’t know they were selling their house.”
I had one guy call me up after he had missed 34 payments and try to talk me into buying his house for CASH from the bank and doing a lease-back. What are they thinking?
Half of the F/C calls we get are people asking to do this. It’s not even worth thinking about. You must concentrate, instead, on learning to sell your program, or develop one for reluctant people. If its a good deal, maybe you should be offering them a % of the back end net profits, or enticing them with more cash. If they still won’t budge, call them up the week before the sale date.
Re: Not on my life - Posted by Mike
Posted by Mike on December 18, 2002 at 01:40:23:
What’s your spiel when you approach a distressed owner? I was under the impression the folks preventing houses from hitting the courthouse steps were indeed working out “lease to own” arrangements. I haven’t had any luck getting an owner to sell to me before the auction, I’ve only been at this a month and half so far though.
Re: Not on my life - Posted by Eric - GA
Posted by Eric - GA on December 18, 2002 at 07:07:15:
Generally, what you’re trying to do is find people who will let you buy their house “subject to” the existing mortgage. This means you would pay the arrearage, then take over payments on the loan. If there is enough equity in the property, you’re going to flip it. If not, you’re going to set up a lease option with someone else, requiring them to give you a downpayment and make you monthly payments for 12 - 24 months, at which time they are supposed to buy the house. If they don’t, they forfeit the DP. So, your spiel to owners should be that you: Will keep the foreclosure off their record, give them money to move, and maybe more cash in their pocket, and you’ll pay off the loan in their name (this is kinda a fake statement, butit makes people’s eyes perk up.). Most of us generally figure a way to show them that if they even had the time to sell their house with a realtor, they’d still come out better with us. Do this by showing them all the costs involved in selling (Realtor, repairs, closing costs, holding costs), and show them that the total that you’re offering (Loan Balance, plus arrears, plus CASH) is just a little less than that (Usually about 75 cents). You tell them that that difference is your profit, and you think that’s more than fair. They’ll ask you for a pen so they can sign the papers.
Eric - GA
Re: Not on my life - Posted by Mike
Posted by Mike on December 18, 2002 at 12:56:04:
Have you ever discussed this with an attorney? I’m under the impression that taking over the mortgage and not paying it off in it’s entirety probably leaves you with the same liabilities as leasing it back to the owner. In fact, this strategy seems more like a blatent predatory practice than setting up a lease.
68% Interest!!! - Posted by Eric - GA
Posted by Eric - GA on December 18, 2002 at 13:09:45:
You buy a house Sub2, Payment was $500/mo, reinstatement you paid is $3500. You agree to lease back to them at $700/mo. So, in the court’s eyes, you are making $200/mo off of a $3500 loan. 200/3500 = 5.7% * 12 months = 68% interest: Predatory. I’m not saying I agree with them, I’m just saying that’s why I don’t touch them.
And I’m not at the same liability taking a house Sub2, becuase I have them sign about a thousand documents giving me every right in the world, and half of those are documents stating that they understand the others.
Eric - GA