All Forum Posts by: Daniel In

Hey. I just happened to post a similar question just now. 

What about in sub2 cases? What if I did sub2 30 years with seller and 1 year lease option with tenant buyer, and the property depreciates and my tenant buyer backs out? I still have years to go with my seller. Giving it back to the seller is the only option? 

If that is the case, sub2/ lease option strategies only make sense when the seller is in extreme distressed financial situation, right? Talking FSBO owners into these type of deals and putting them in this situation could turn out terribly for the seller, isn't it?

Hi everyone. 

As I am working on my first owner financinig deal, I have one last fear that is making me think this might go down badly along the way. Please calm a newbie down if I am worrying too much.

Here goes the question. This is a hypothetical situation.

 So, I buy a property with sub2 and sell it with lease option. Price is of course set at the day of closing with the seller. However, as years go by, the market crashes and the economy sinks down, and my tenant buyer cannot afford to carry on with his payments and decides to back out. Now I have a property that only is worth half the price from what I have agreed with the seller years ago. (500k on the contract with the seller, now is 350k in current value) Now, I cannot find any buyer who is willing to pay 500k for the property. 

What can I do in this situation? Just dump it back to the seller and say "sorry it didn't work out as I thought it would. You're going to have to foreclose it or short sell it."? Or make the seller agree to reduce the price down to current market value? Or just take that as my loss?

I know people have been using this strategy for a long time in real estate. So, there must be ways to go around, however, my little brain couldn't think of any. Please recommend a solution to this possible outcome!

Thank you.

Thank you Dylan. Will keep you posted.

Hello everyone.

I have a sub2/ lease option deal going on right now and need to find someone who can guide me through the rest of the process, from signing contract with the seller to closing with tenant buyer. I heard that in California, working with Title companies is standard. Or do I still need an attorney to ask for legal advice? What is the best bet for me? Or anyone who can refer me one?

Thank you all.