Lease Option a Short Sale Condo

Is it smart to lease option a short sale condo? I don’t qualify for a traditional loan, but want to take advantage of the low market prices. I will be going to school so I would have to pay rent anyway for an apartment so I figure a lease option would be a good solution since I could buy it when I can get financing?

Are there other ways to protect myself and the deed other than recording a Memorandum of Agreement, putting the deed into a land trust, escrowing the agreement, and getting a Performance of Mortgage?

:shocked Are you saying that a lender is willing to let you purchase a short sale deal with a lease option!? I can’t imagin a lender being willing to do that. Do I misunderstand something here?

I haven’t spoken to the lender yet. I was really just exploring the situation and looking for some general advice about lease options for short sales. I figure if the rent is enough to cover the mortgage payments then the lender might do it being they’re going to take the loss anyway.

im making offers sub2 a loan modification with the intent to do a lease to own using a land trust. pretty much id get the seller to sign a 90 day non exclusive option, then have the seller pay for the loan modification while i market for an incoming tenant/buyer to take over payments on a triple net lease basis on a successful loan modification. ideally we’d want fixed rates and new lower monthly payments for the tenant/buyer to take over. id get 5%-10% up front which would cover the closing costs, trust setup and a 2-3 month reserve. anything left i split with the homeowner and/or investor that brought me the deal. i can also get a separate investor to pay 10 cents on the dollar if there’s a 2nd to get some principal loan reduction and have the investor participate in an equity share when the property is sold or refinanced.

they main thing is to get the seller to agree to wear an investors hat and stay out of the property and allow us to structure a lease to own arrangement as principals in the deal.

so im actively looking for properties with bad underlying financing with the intent to do sub2 via land trust, then loan mod, then lease to own, then equity sharing on the back end.


Your plan is logical but unfortunately you’ll be dealing with a non-logical entity, namely the bank. If you find a good one try to find an investor to buy it with you coming in as a tenant/buyer. You would probably need an option fee of 5-10% of the price you agree to pay for the property. See my Lease Option report at the blog link below for more info.

Good luck,

im actively looking for properties with bad underlying financing with the intent to do sub2 via land trust, then loan mod,

Defcon, I’m curious how you purchase sub2 then get the lender to modify the loan. You control the deed in a land trust, so do you negotiate with the lender posing as the mortgage holder? If not, then you are negotiating with the lender as the new owner of the property, right? And if you are the new owner, having bought it sub2, then why would the lender grant you a modification?

I am probably not understanding some aspect of the deal. Thanks for the info.