Help with structuring a deal

I’m a newbie and trying to put together a deal on this house and looking for a little help. The owner in currently in trouble with a few missing payments on the house and can’t refi or get an equity loan to catch up. I told him that I would buy the house from him and rent it to him for set length of time. My question is how do I structure the deal were I can buy the house and put some money in my pocket at closing (legally of course)? He owes 162K on the house that is worth about 210K. I heard this has been done before but not sure how to structure the deal. Any help on this would be greatly appreciated.
Is there a term used for this kind of deal?

You may want to take over his loan “subject to” that way you can still rent it out to him and once he moves out you can rehab and sell, then you would be putting your money in your pocket legally. Good luck!

P.s. how did you find this deal?

Thanks for your reply star1.

I found this deal through my mortgage broker. He was trying to refinance/Equity loan and when he couldn’t get the financing my broker called me with the lead.

The problem with that is that we want to structure the deal so that I buy the house, I get paid upfront with some of the equity in the house, he makes rent payments to me for a year or two until he can get his own financing. Then he will buy the house back from me. My problem is I don’t know the following:

How much to buy the house for
How to get some of the equity out for a down payment
Should I have a set price to sell it back to him or wait until he is ready to buy it back?
Would a sub 2 do the same thing for me?

Thanks for your help

Check your state laws. If you’re thinking about giving the owner an Option that’s a big no-no in states like California. Courts have been interpreting that as a loan to an owner in foreclosure which bumps you to salesperson or broker status. Guess what happens if you don’t happen to be a licensed salesperson or broker? It’s not pretty. Even if you were, the penalties for not following the very strict lending laws are severe.

I’d take star1’s advice, just buy it subject-to, give them a little cash to go rent a place (it helps to have a couple apartment complex leads that will take people who have deliquencies) and buy the property and make a clean break with the previous owner.

Good luck