Leasing house back to buyer? - Posted by lilazngrl0

Posted by Robert (NC) on February 19, 2002 at 12:25:58:

If he can’t make mortgage payments how, how can he afford the rent you will have to charge to cover, Mortgage, Taxes , insurance, and other expenses ? Just consider that if you are thinking about leasing back to him…


Leasing house back to buyer? - Posted by lilazngrl0

Posted by lilazngrl0 on February 19, 2002 at 11:34:09:

I got a call from a seller who is going through a divorce, and his first note went into default last thurs. The balance on his first note is 100,000 with monthly payments of 966.99. The balance on his second note is around 26,000 with monthly payments of 284.33. He bought the house for 126,000 last dec., so basically he has no equity in his house. He saids house would be appraised for 135,000…I’d say prob around 130,000. He’s open to any suggestions, but would like to look for an investor to buy the house and lease it back to him. I remember reading somewhere that investors should never do this, can someone please explain why? To me, this deal looks too thin to do anything with. What are your opinions and suggestions? Thank you in advance!

Re: Leasing house back to buyer? - Posted by richard

Posted by richard on February 19, 2002 at 15:56:08:

This article at Legalwiz.com may help:


Usury laws - Posted by ken in sc

Posted by ken in sc on February 19, 2002 at 13:46:42:

Usury (higher than the law allows) interest is probably why you read not to ls/op back to the seller.

For example, if the seller is $5,000 behind on his payments, and you buy the house “subject to” by catching up these payments, and then sell back to him for a $10,000 higher price than you paid him - then you could be found in court to have charged him 200% interest ($10,000 on $5,000). In other words, the court would say that what you really did was not buy the house, but made him a loan of $5,000.

Now, where do you live and what are the laws. Here in SC, we do not have Usury laws and are free to do this if we like. But many states not only have laws, but case law that could be used against you. It is up to you as a businessman to determine what you can do where you live.

As far as this deal, it is too thin. If he does not pay you (as Robert pointed out, he has a history of that), then you now own a house with no equity and high payments. I’ll take a house with no equity and low payments, but not with high payments.