Looking for a lease back investor

[Mark Lawson]

Does anyone know a good place to look to find some (need one) investors that would be interested in purchasing a foreclosure and lease it back to the owner on a lease purchase. The home can be purchased for $180k on short sale and the value is around $240k to $250k.

I have seen a lot of discussion that these do not make sense because if the home owner can not afford them in the first place then he cant afford the lease payment but in this situation it will allow the home owner to file chapter 7 vs chapter 13. He owes $240k on the house now plus another $200k in debts. If he files 13 and keeps the house then he will have to catch up back payments and still pay $50k of the other debt so he will have to repay $290k.

If he sales the house to someone and does a lease back with a option to purchase then he can wipe all his debt away and only have the house payment do he saves at least $50k or more depending on how much the investor is going to want on the lease purchase so he cuts his monthly payment by a good bit.

If anyone knows any investors doing this please let me know and I can put you in touch. The property is in TN in one of the major cities.

[Jon Holdman]

This can't legitimately be done. The bank that accepts the short sale will require that the owner receives no benefit and moves out. The buyer of the property would have to claim the previous owner was receiving no benefit when in fact they were.

Further, this sort of deal puts the previous owner in a great position and the investor in a very weak one. P&I payments on $180K will be about $1080 a month, or $810 with a 25% down payment. To be a decent rental, the investor would need $2000 a month in rent. I suspect his current PITI payment is less than $2000.

Further, if the investor sells an option to repurchase for $250K after three years, the owner can claim an equitable interest in the property. If the former owner doesn't pay (like he isn't paying now), and the investor tries to evict him, the judge may say, no, you have to foreclose. The judge may look at those terms (invested $180K, which the judge may view as a loan, $2000/month payments, a three year balloon of $250K) and compute the effective interest rate. Guess what that works out to? 24.75%. The judge could say "illegal loan, I declare it invalid, Mr. Former Owner, you get the house, Mr. Investor, go away."

These are bad deals. Just say no.