When you get into preforeclosing houses, I think one way you could approach them is to offer a lease purchase, and then turn around and do a sandwich lease.
Maybe you could use the option money that you get from your tenant buyer to make any back payments or get taxes current, then use the addtional time during the lease purchase/option to get your credit matters together just in case your tenant/buyer does not exercise the lease at the end of their period. This way the property would at lease be in your control, not to mention how motivated the seller is likely to comply with your purchase price offer ( which should be far below market/appraised value).
I found a site that lists properties that are in the pre-foreclosure stages, www.foreclosurefreesearch.com - you might find it helpful 
I just wanted to add a couple of things. I don’t mean this first part to be discouraging, just a different perspective I guess.
We own rental properties and currently have a couple of them under lease options. Personally, I would never do the sandwich thing that was talked about in this thread. If someone approached me up front about it I would turn them down cold, and if someone did it behind my back they would be breaking my lease (it states no sub-leasing ) and they’d be out. My reason? Just WAY too much liability with out any additional benefit to me. Now once they exercise the option to buy they’d be free to do whatever they wanted with the property at that point. But up until that point I don’t see any benefit for me to do it. (If there is, someone please let me know. In our area there is NO shortage of people wanting to lease/purchase or buy on contract, so it’s not like I’d be turning down my only potential buyer.)
As far as how to get the properties w/out putting up any money…are you looking for straight flips? Rehabs? Do you have a direction you want to go in? Or are you willing to try anything? Perhaps you could bird dog a couple of deals to get the cash to do your own first deal.
I’ve had GREAT luck by just talking to anyone and everyone I meet. I tell everyone what I’m doing and what I want to do. I tell everyone that I’m looking for properties. Depressed properties, estates, properties that are about to be foreclosed on, etc, etc.
Have you gone to a local REI club? I just started going to ours and already I have people calling me about properties and a couple of people who have told me to let them know whenever I’m ready to do a deal - they’ll help finance. Because I’m so excited about it and I’m VERY talkative, meeting everyone, introducing myself, calling them the next day to tell them it was nice to meet them, etc people remember me and they see me as a “go getter.” I think if you just put yourself out there it’ll start to happen. All you need is a decent deal to net you enough cash to really get going, no?
Good luck! Keep us all posted!
Karla in Amarillo
I am still in the learning process, but I want to ask you what type of liability there is with doing a sandwich lease? Since you are getting your option money and/or lease payments each month, is there really a difference between the original tenant/buyer and secondary tenant/buyer? Seems like you have 2 parties on hand to make the payments on your mortgage instead of one when you do a sandwich…if the sandwicher falls through, then the original guy will have to front the money regardless…please explain the liability that I might be missing with this deal… ???
In theory, you are correct…the original person who I made the deal with would be responsible, but
Can you honestly tell me that if your tenant/buyer trashed the house and disappeared you’d have the money to continue paying the payments and fix up the house? That’s just one example. Or, what if (God forbid - we have NEVER had this happen and hope we never do.) the tenant/buyer of YOUR choosing (not mine) gets injured and sues the pants off me. Of course someone of my choosing could do this, too, but I feel that it’s less likely.
I’ve learned through the rental process that although I may be covered/protected/in the “right” according to my lease it’s still just easier to avoid problems before they can occur. If I lease/option to someone who is trying to buy a home for themself I have screened that person and they WANT a home, so I feel they’re less likely to mess up. If I lease/option with someone who’s looking to “do a deal” I just feel there’s a big element of control missing there that I’m not willing to give up.
This is just my opinion. In my area there’s absolutely NO shortage of people wanting to do lease/options because it’s the only way they can buy a house for themselves so I can afford to be picky.
I’m not saying that you wouldn’t do a good job of what you’re trying to do. And if you’ve found a willing seller go for it. I just replied to one of your threads and didn’t quite realize you were doing a deal like this…I thought you were just buying something outright to lease/option. Don’t let me discourage you - I just wanted to give an opinion from another perspective. Based on my own personal experiences I see too many potential headaches - that’s all.
Best of luck to you!
Karla in Amarillo
Per your comments:
Can you honestly tell me that if your tenant/buyer trashed the house and disappeared you’d have the money to continue paying the payments and fix up the house? That’s just one example. Or, what if (God forbid - we have NEVER had this happen and hope we never do.) the tenant/buyer of YOUR choosing (not mine) gets injured and sues the pants off me. Of course someone of my choosing could do this, too, but I feel that it’s less likely.
For me, I wouldn’t even think about doing a l/o without having the vacancy/maintenance nest egg already in place. That should be calculated up front when you do your cash flow analysis. As far as damage to the property, the whole intent when you go for a tenant/buyer instead of a straight renter is that in theory it will be their house soon and therefore unlikely that they would waste time to invest in something that they are going to damage. Remember, when someone gives you a substantial amount of option money, they are not in it to see what they can get away with, they are earnestly trying to own their own home.
Also remember, 90% of your investing endeavors should be to MAKE money, the other 10% is to help others. Look at your property as a cash machine instead of a house you are emotionally attached to. Someone told me this when I first started researching this and I thought it was good advice.
I would encourage you to continue to learn about the sandwich l/o’s. There might be ways you can start doing them and set your own limit/standards of the type of risk is acceptable to you.
LOL! I learned a LONG time ago not to have an emotional attachment to my properties! And I learned the hard way. That has nothing to do with my concerns relating to a deal like this.
I’m just looking for the cleanest deals possible. Because of the various things going on , RE stuff, family stuff, my other activities, etc. I just need fewer things to deal with rather than more. I’ve learned from experience what red flags look like, and when I read the original post about this it just struck me as a deal that would be laden with red flags. I have not been approached by an investor wanting to do a deal like this. If I were, and it was the only person interested in that property I’d consider the deal based on its own unique circumstances. If you approached me, as well as a straight leasor/buyer who didn’t check out I may very well do a deal like this with you if you checked out and convinced me you knew what you were doing. I am just very fortunate (YES! I realize it!) that in our area we have our choice of who to do the deal with.
Someone had asked originally if the middle-person should tell the original seller what they were doing or just hope they didn’t find out. I guess that bugged me and is what originally made me reply.
It sounds like you’ve found a willing seller and that’s all that matters for you to do your deal. I’ll be interested to follow how it goes…sounds like you’re definitely on the right track.
Karla in Amarillo