Posted by greg on August 08, 2003 at 14:21:19:
i need some help on how to structure the deal.
As far as i am concerned this is just business and i do not want to get burned
texas foreclosures - Posted by greg
Posted by greg on August 08, 2003 at 11:35:24:
I need some help. I have a friend of the family (in Texas) who is going through foreclosure. I want to buy there house rent it back to them then sell it to them when they get in better shape. What is the best way to go about this and limiting my risk?
Here are the numbers
House worth $100000
Owes 70000
I want to buy the house for $80000 and have them give me $10000 repair allowance
Get them on a lease to buy option with the rent being my loan amount (taxes and insurance) and they pay for future repairs with the option to buy the place any time in the 5 years.
Thanks
Greg
Re: texas foreclosures - Posted by Jasonrei
Posted by Jasonrei on August 08, 2003 at 15:38:19:
You have to be careful how you set this up. I’m in TX. I sometimes work preforeclosures. I thought I might be able to make some money by buying people’s houses from them and either selling it back to them with owner financing, or leasing to them with an option. He said that I had to be very careful. The deal could be seen by the courts as a usurious loan, makng me subject to heavy penalties. Same thing with doing a lease/option.
I’m not saying doing so would be illegal. I hope someone else will respond that has an actual story or two.
Re: texas foreclosures - Posted by Bill H
Posted by Bill H on August 08, 2003 at 13:00:53:
Greg:
I, like Jim-FL, think you should VERY SERIOUSLY consider what you are getting into.
I have always had a policy of:
-
Never loan money to family.
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Never rent to friends.
Has saved me lots of problems. I once violated the rule and rented to my wife’s boss. One helluva MESS.
Good Luck with whatever you decide,
=========>Bill
Re: texas foreclosures - Posted by Jim FL
Posted by Jim FL on August 08, 2003 at 12:41:01:
Greg,
While this is a very nice thought, with emotion into it, take a step back for a second.
I’m not saying don’t do it, only you can decide that, which it seems you are leaning toward, hence the post here.
Just take a few moments and look at this without putting the “Who?” in the equation.
If these were just any other seller, how would you handle it?
Granted, they are relatives, so you might be able to be a little more direct with them, and I advise that.
The first thing I’d do is to see why they are where they are?
What caused the foreclosure?
Was it a short term financial problem that is over?
Have they repeated, or corrected the behavior that led to the problem?
Can they be on the right track?
If not, relative or not, are you prepared to do what it takes to get them out, if they default and save your investment?
Should things go arry, will the relationship survive?
I can only assume you are close, because most folks would not do such a thing for a relative unless they were.
Do you want to jeopardize that? Can you make sure business remains business, and family remains okay?
The only reason I want you to do this, is because a house is a house, just inventory to you, but not to family memeber living in it.
I’ve worked with family memebers before on deals.
While I’m glad I did that, because we all made money and it helped them see a little of what I do for a living, it is not something I’ll repeat.
What does the area look like? will the house increase in value over time, and will they be okay paying you well more for it then you are paying them?
I also just noticed again, this was a family friend, not family.
Same thing applies, since you are obviously close to these people, or in good standing with them.
Approach with caution, and make sure EVERYTHING is done in writing, perhaps with an entity, not you personally, just in case.
I’d probably just help them structure a deal with another investor, and get out.
Avoid the possible comflict in the future at all cost, no dollar amount is worth it, trust me.
Good luck,
Jim FL