What would you do? I have a seller who wants to get out of his 4 plex. Willing to do a lease option - I take over his mortgage payments for 2-5 years until I can refi in my name.

[Gabriel Meerzo]

Property is worth 80,000 - 90,000

Original loan was 100,000 with a property value of 120,000

I would be taking over at 82,000 due on loan at 7.5% (just taking over payments on his mortgage as I can't get conventional or private money)

Net income is $1550 monthly

After expenses it cashflows about 280 a month

Problem - He is 3 months behind on mortgage

He has owned the property since 2000 and done a lot of work to it. He is willing to just sign this easy (for me) deal. What am I missing. It seems to good to be true.

[Jon Holdman]

If you do this as a lease/option, you won't be able to refi later.  Strictly speaking, you're talking about a "master lease/option" because you're leasing the entire building, then subleasing.  If you want to be able to refi, you want to do an actual purchase "subject to" the existing loan.  That way you own it right away.  The mortgage is left in place and you start making the payments.  There is risk, but the risks are the same with the option part of any lease/option deal.  You would do the transaction at a title company just like any purchase.

Do a search on "subject to".  There's a lot of discussion about that, including a very recent thread where the lender called the note due.  Don't be fooled, though.  An option violates the due on sale clause just the same as a purchase.