Posted by Monique on June 18, 2000 at 12:02:07:
I was approached by a seller wanting to do the same thing. I got lots of useful feedback from people on this site suggesting NOT to do it. If the folks were having problems paying their lender for their mortgage, how will they be able to pay you for the lease? Also, there has been some litigation where former owners of pre-foreclosure houses sued investors for usury. The former owners later claimed that the transaction was not a sale-leaseback, but instead a very high interest rate loan. You can do an Archives Search on “Sale Lease Back” to find many posts on the subject.
Regarding your question about getting additional consideration from a Tenant/Buyer after the first year of a lease. If a T/B does not exercise their option during the option term, their consideration is forfeited. At the end of that term, you (as Lessor) can choose to offer the T/B the opportunity to purchase another option term with additional consideration. You could also increase the monthly lease payment at the end of the lease term as well.
I’d highly recommend investing in your L/O education. There is some great material at this site. It will pay for itself many times over in just one deal. Not knowing how to protect yourself could easily cost you ten times the price of a $395 course.