closing help

I have a deal that I’m arranging a lease option. What I plan to do is to purchase the property from the seller and help her to get to the equity in her home because she doesnt qualify for a refinance. She has 9k in debt and she needs 15k for financial reasons. I plan to lease option the deal selling the home back to her at Market value in 2 years.

Here’s are the numbers.

The Balance is 118k

The value and sales price is 300k

Closing cost are estimated at 8k

My question is how can I construct this deal? I have a lease option contract ready for her to sign and she’s more then will because I am paying off all of her debt, giving her cash, she’s keeping her home and I am lowering her monthly payment. Do I need a separate addendum to get paid out at closing or do I get some type of lien attaching my $100k+ to the title. How do you arrange this through the title company?

I have 730 plus credit scores and in the contract the seller pays for all of the closing. I want to make sure that I am setting this up correctly.

Can so help me to set up my contract to protect my investment?


Experienced investors, gurus, course writers, etc. say all the time NOT to rent back, sell, lease, etc. to the original seller. They don’t say this just to hear themselves talk or to take up space on paper.

There are tons of possible legal problems that can, and do, arise from this type of deal, if you want to call it that. On the surface, this one may look worth the risk because there is so much profit potential. However, it’s that profit, or equity, that makes this one so dangerous. Once this seller’s problems are over, it’s doubtful if she will be as willing to pay you $100K extra in order to get her home back. If it goes to court, you will probably lose, regardless of how “right” you are. The courts almost always side with the homeowner in these cases.

Barring the above, I see other problems with this “deal.”

You don’t say how much you are actually giving her for the property (BTW, problem here is you’re supposed to GET $$$ when someone moves in, not give it). From you figures, it looks like about $141K. If this is correct AND the market value is correct, then take the deal ONLY IF she moves out and resell it to someone else. It’s good if the repairs aren’t too high.

Also, you say that she doesn’t qualify for a refinance. If this is true, then how is she going to qualify for loan in a year or two?

Loans are harder to get than a refinance, and if the numbers you give are correct, she would have to have completely horrible credit NOT to get a refinance on the property.

She needs slightly less than 50% of the LTV of the property. At that percentage, my dog could probably get a refinance on the property. All it takes is just a minute or two to pick up the phone and call a mortgage broker.

Hope it helps,


Hello Matheno,

I’m going to have to agree with Roger, Do not do this deal. This is a loser! As rog said, you never want to Lease a house BACK to the seller. Its just wrong! Your going to end up losing your rear here! If she really wants out of the house, purchase the house from her, but DO NOT lease it back to her. This is not a WIN WIN for you and her, This seems like a WIN for her and a LOSER for you!! Re-check this deal and slide out of it!!!

Good Luck!!