Is there a way to use the lease option methods when dealing with a preforclosure? Course of actions to take?
I hear you cant do them unless you pay the back taxes … So i hear…But it only makes since
My recommendation is to stay away. I’m not sure exactly what you mean by lease optioning a preforeclosure but here’s my story…
The family was 3 mo. behind when they called. Rather than make up the ~$3000 back payments and tie myself into the house. I tried to complete a short sale with the bank. In the mean time the seller was to keep making payments (he now had a job so he could pay) while I tried to lease option it out to a tenant buyer. If I found a tenant buyer that could put $4k upfront, I would just make the back payments and lease option the house from the seller. Well, after about 2 months I found a TB that had $4k. In checking the seller’s bank statement, I found out he wasn’t making the payment and now was almost $7k behind (principle, fees and interest). In the end I had to give the TB back their upfront money and walk away (the bank just quit talking with me about the short sale). Unfortunately, the family was foreclosed on and the house put on the market…nobody won.
Now this may be a bit more complexed than what you’re trying to do but everything had to work perfectly or no deal. Well, let me clarify. The risk was greater than what I wanted to deal with so…no deal. It always goes back to risk vs. reward.
Good Luck!!
Yes and no . In foreclosure no… too much arrears, but if pre-foreclousure yes you can, if you struct it and make sure you do all your homework to make sure there is no liens. Be very care, people under foreclosure are in foreclosure for a reason. If thier situation is taken care of preceed. If not pass on the deal.
Agree with Johnny Q. Be careful. Are you lease-optioning back to the HO or someone entirely different? I assume you would have the HO move and LO to someone else. You could negotiate a loan mod to take care of the arrearage, then Sub2 or LO back out. However, that is awfully sticky. I would do it if only there was a nice pay day attached to it, and if everything was above board.
Turborockets right. Everything I was taught was that you done even think about lease optioning a property with a potential financial crisis looming over the property and owners. You have zero leverage and the potential of losing everything. SUB2 is the best way for these. That way, you “own” the home, while they own the loan. You’re in the power position.
John McNamara