BiggerPockets

Can you still do it? Is it worthwhile? It seems to me that there are soo many deals out there that it may be a waste fo time to take over the current mortgages. Are the banks even willing to work with people?

Thanks for the reply, This is kind of what I am asking about. I know about the land trusts and taking over the house getting the deed as I did it a few times in the late 90's early 00's. Do the banks even work with people any more when you get the deed on the house? There just does not seem to be much need for this right now as there is not much equity out ther is there? I guess you would have to just look at one deal at a time.

The general rule is that the loan amount + the cost to bring payment current + any cash to the seller + repairs should be "at minimum" under 85% of current value.
The payment should also be less than or equal to the current market rent amount.

Will,
I agree completely... I probably should have mentioned the necessary reserves and the potential exit strategies, but I wanted to stick to generic acquisition costs.

Probably not... I only say probably because there are certain situations in which I would recommend it. If there are low out-of-pocket acquisition costs then you can take a greater risk. The most important part is to ensure that you have "realistic" exit strategies. This is the biggest mistake I see new investors making.

The main obstacles are the following...

1. Finding a lease option tenant with the ability to place a large enough deposit to cover the overhead very quickly. This is often times harder than it looks, and there is nothing worse than paying on a vacant home...
2. The acquisition price should be well under 85% if you're going to risk it, closer to 70-75% and your reserves should be sufficient enough to handle at least 6 months.

That original seller, who is still on the hook for the mortgage, will no doubt tell everyone that you did not live up to the promise.

Not to mention that the original seller is going to sue you and they just might win. I know, I know that you attended some guru course that gave you an iron clad contract and disclosure that the seller signed. Unfortunately, you can NOT sign away your rights and the tenant can still sue you. In this environment where we're looking for scapegoats, an evil investor who took advantage of an naive homeowner is a prime candidate to lose a lawsuit.

Mike