Ive seen someone do this before but I am not sure
exactly how to structure this deal and the legality of
it. Example… Person X is in foreclosure and the
redemption period is soon up- bank will take the
property. Private investor steps in with his company
called ‘Investor X, llc’. The balance on the mortgage
is say $60,000. they also have backed taxes,
penalties, etc of about $10,000. The house appraised
for $100,000. At this point the homeowners are
terrified that the bank is about to actually take the
property, they would just love to stay in the home.
“Investor X” steps in and offers to buy the property
and rent it back to them so that they can stay in the
home. Needing a quick sale, the homeowners would agree
to sell the home for $70,000 to satify all of the
debts. ‘Investor X’ offers to do this but this is how
he structures the deal. He uses his personal credit or
someone else with good credit to to get a 0 down
interest only mortgage for the appraised
value=$100,000 ( so that he can rent the property to
the homeowners at a payment they can afford and still
make a little cash flow from the rent) . The
difference in equity $30,000, he pulls out as cash
going in his company’s bank account at closing instead
of having it sit in the home.
Does anyone know how to structure this contract
between the investor and the client so that you can
pull the equity out at closing like this?
Thanks much,