Lease Option Price of property set and owner out of state equity is 40-60K

Hey Guys and Gals :

I have a rather strange situation that I literally fell into about a year ago.  I moved from Ca. To Georgia and was looking for  property to purchase and rehab to start my investing career, well ended up renting a room in a 1920's bungalow and 3 days later the owner, who also resided there., disappeared and I didn't see him for about 30 days, so me in a house all by myself great.  Owner returns and states he had gone to rehab and was confident he would make it. Well needless to say he didn't and I ended up with a lease option to purchase his house at the then fair market value of the home. Well My stipulations were  I would pay the bank and keep the house up and for that receive a 6,000.00 and pay rent in the amount of 600.00 per month the then house payment.  One year later, no owner that is sober and finding out house payment has been behind 2 months for a year so penalties and etc. House payment now 775.00 and owner wants money to come to him now.   

The deal:
House purchase price to me would be about 75,000
bank is owed approximately 71,000
House needs about 20,000 in rehab work
Housing comps in the 3 block area around are anywhere from a low of 110,000 to a high of 150,000

should I try and get a hard money loan to buy him out and then rehab and resell?

should I put a lien on it and move on ?

should I assign my lease option for what is owed to me? and can I ?

or ? anything to recoup the about 10,000 I have put into it for repairs and upkeep.

“One year later, no owner that is sober and finding out house payment has been behind 2 months for a year so penalties and etc” doesn’t make any sense.

Try again.

Who/where are you making payments to currently, and why would making payments to the owner be any different than before? I mean if you were making payments directly to the bank, you would know if they were current, or not. Right?

Did the owner not come back? Is the deal cancelled?

I don’t understand what you’re wanting to accomplish, or exactly what is going on.

More information please.

I was making the payments to the bank and was not given any information and it was through Bill pay at Wells Fargo were the mortgage is held as well, No I did Not know it was behind until last month when the late fee’s associated with the 2 late payments for a year totaled enough to start foreclosure on the home.

Owner Is not reliable in the regard to the sobriety so I am at the point of having to secure my investment or I should say output to fix home. Said investment includes the monies for Down and the upkeep and repair of the house that have almost wiped me out.

My question is what are my options? what can I do ? I am lost.

Lease option states I am to pay note to Bank at $600.00 Now payment is 775.00 I again Can not get the information as to why payment is now more.

Obviously dealing with a drunk produces a lot of drama and trauma.

I’m guessing he’s not the only one on the loan. If so, this complicates my solution, but…

In this situation, you need administrative control of the loan. You can’t depend on this flake to either honor his commitments to you, much less remain available. So, stop going down that dead end with him.

If you don’t want to cure the default, and maintain the option to buy the house, then you walk.

If you want to salvage the deal, forget the lease/option route. That was over once the drunk failed to maintain the loan, or lied to you about the default. This would normally be a breach of agreement in a standard lease/option agreement, in which case the Optionee would demand return of all monies paid to the Optionor (drunk), as total liquidated damages.

Well, that would require an attorney, and a few years in court. Sure.

Another alternative:

Request that drunk give you access to his loan account online. This allows you to check everything about the loan, without having to talk with the bank.

If you like what you see; want to cure the default; make the payments from now on; and want to own this house; then proceed to:

  1. Secure a power of attorney with online, administrative-rights over the loan
  2. Have the drunk deed his house to you in a recorded Land Trust (extremely important) showing you as the trustee, but not disclosing you as the beneficiary.
  3. Cure the default.
  4. Take over the drunk’s loan payments (This is not an assumption, and don’t even mention assumptions, or taking over loans with the bank …at all.)
  5. Offer the drunk a free place to stay for 12 months to sweeten the offer?
  6. Create a note for the drunk’s equity, if there’s enough to screw with.

Bottom line:

  1. You own the house.
  2. You control the loan.
  3. You become a homeowner.
  4. You don’t need credit.
  5. You don’t need to prove income.
  6. You improve your financial statement.

Nobody can tell you what you should do. It all depends on the drunk(s) cooperating in solving your problem, and your capacity to cure and maintain the loan. If not, than you walk. Lesson learned.

However, again you’re done with Lease/Options with this drunk. You want the deed. Or he can suffer a foreclosure, but there’s no point in salvaging the drunk’s loan, if he won’t cooperate with the above solution.

I mean making payments on a drunk’s defaulted loan, shame on him. Continuing to do that, and you’re an idiot (said in the nicest way imaginable). :beer

Good luck. Hope that gives you some idea of what’s possible. I bought my third home this way. It was way bigger, nicer, and more than what I could afford to finance with new financing from a bank. So, I didn’t. The seller and I said, “Screw the bank!” And I’ve been saying that over, and over, and over again for twenty-plus years!

Thanks for that and yes the saving grace is he is 2800 miles away as well.