Buy and Rent back to Last Owner?

I know its not a good idea to lease option back to the owner when you buy a forclosed property… BUt what about buying and renting back to the last owner, Can i do that without any complications? or what kind of trouble could i run into?
thanks Tommy

Howdy Shaamrock:

You still have the same problem. Potential deadbeats who can not pay their payment. If there was a clear reason why they got behind and now the problem is cured you may have a fighting chance. A lot of the problems do not go away like a loss of a good job in a downward market or the closing of a plant or military base etc. It is easier to evict tenants than it is to get an owner out but still can take several months.

Some investors never lease back to the owners and some will. It is kind of a personal choice I guess but try to make sure they can now afford the payments.


well this guy hurt his back and has about 50.000 equity they said he would be able to work again in a few months. So i fugured with the money he makes off the sale that would allow him to pay his rent for the next 6 moths to a year. But the only reason i’m considering is becasue of the equity . Put a new roof on and refi pull the money out before he give me any trouble

The problem in many states is that this type of sale is considered at distress and may be considered a loan. You alleviate some of the problem by not giving him any right of buy back. Check with a qualified attorney to see what your state laws and decisions are.

I would make the lease short term then extend it try to show that he intended to stay there only a short time.

ok what about just buying the property and renting it out to the last owner on a regular rental aggreement?
any problems?

I just have a deal with a similar situation (preforeclosure), and the owner wants to buy back the property. Should I structure a lease option? Why do investors afraid of lease or rent back to the owner in foreclosure. Is there any legal issue that I don’t know?

I believe that if they can pay the rent, they should be okay, right?

If you don’t might I am asking, how did your deal turn out? Did you rent or lease it back to the property owner?

i think there is only a problem when you take the property subject too exsisting financiing. But if you buy the property and get the loan in your name it should be ok.

Why is there a problem with take the property subject too exsisting financiing? Can you elaborate? Thanks!

well i have heard some investors doing it but you have to be very carfull close at a tittle company for sure and write up a sales contract and sometimes video tape the closing. From what i hear thats the only way to protect your self if they say you were just loani and they didnt know they were selling their house.

I once knew a guy who hurt his back and figured to be back to work in 4-6 months.

Years went by . . .


You never said what you decided to do, but since the question was asked why it’s a bad idea to rent back (either straight rental or L/O) to the original owners, I’ll go ahead and answer.

First, as Ted said, there is the problem of payment. If the owner/seller was not able to, or would not, make the mortgage payment, then it is highly unlikely that they will be able to, or willing, pay you MORE per month just to rent the place. IF they owner/seller CAN make the monthly rental payment, then they should be able to make the mortgage payment, so why aren’t they? If they can make the mortgage payment now, but don’t think that they have any way to prevent the foreclosure, AND you don’t inform them that it might be possible for them to work out a deal with the bank, THEN you come to the second reason for not renting to the seller/owner.

Second, LAWSUIT. Hope that’s simple enough. As stated above, you can be dragged into court even if you “just rent” the place. All it takes is for the seller/owner to decide that they have been “wronged” somewhere in the transaction. The are a number of possible lawsuits that could stem from leasing back to the original seller. It’s really just a matter of how creative the seller and their attorney wants to be in the matter. And it really doesn’t matter if you have seven different signed contracts, five different CYA forms, a video tape of the closing, and a signed confession from the seller’s grandmother confirming the sell. If you go to court, it will cost you regardless of the outcome, and it situations where a homeowner is crying FRAUD, the outcome is never assured, regardless of what documents you have to cover yourself. In fact, the only thing that is assured is that you have a 50-50 chance, at best, of winning AND keeping the home.

In short, the return is seldom, if ever, worth the potential risk involved.

Hope it helps,


This may strench the boundries of “creative” but since I have no idea I will ask :stuck_out_tongue:

If the property is a bit run down, is there a way to negotiate a short sales with the bank, then lease/option or rent the property back to the original home owners at less then they’re current payment?