Does anyone have any experience with high equity foreclosure? Purchasing the property, keeping the owner in their home, and offering them option of a buy back.

Umm...all things being equal, if you purchase a property at foreclosure auction, you can do with it, whatever you want to do. It's yours. What equity there may be between the auction price and the debt you bid against, is only relevant to you.

My personal experience though is, absent any extraordinary circumstance, usually, previous owners do not make the best tenants. They didn't pay their note, you are risking they are going to pay you. I get that you have that risk with any tenant but its amplified with the emotional connection to the property with having the previous owners as tenants/future buy back owner.

If they didn't pay the bank, why would they pay you? It sounds like you're tying your hands for no reason, finding buyers should be easy if the house is priced right. 

So in a case like this is the next logical step to start the eviction process once the deal is done so you can get into rehabbing/prepping for sale/rent?

Originally posted by @Craig Castro :

So in a case like this is the next logical step to start the eviction process once the deal is done so you can get into rehabbing/prepping for sale/rent?

After a foreclosure, getting the previous occupants to give up possession is the next logical step. We try cash for keys before we start eviction. We get a cooperative occupant who voluntarily leaves the property without causing damage to it and they get some money to move on with their lives. If they don't cooperate, yes, start the eviction.

First it can NOT be uncle George sale. Must be arm length transaction. If the lender who lost money in it he is likely to go after you and him purchased at lower than the loan balance.  Bottom line is do not do it. 

Originally posted by @Andy Mirza :

Originally posted by @Craig Castro:

So in a case like this is the next logical step to start the eviction process once the deal is done so you can get into rehabbing/prepping for sale/rent?

After a foreclosure, getting the previous occupants to give up possession is the next logical step. We try cash for keys before we start eviction. We get a cooperative occupant who voluntarily leaves the property without causing damage to it and they get some money to move on with their lives. If they don't cooperate, yes, start the eviction.

 

That makes a lot of sense.  My brother went through foreclosure during the '07/'08 recession and participated in some "cash for keys" deal.  I always thought that was something offered by the lender, never thought about the new buyer wanting to protect their investment.  Thank you for your response.

Originally posted by @Sam Shueh :

First it can NOT be uncle George sale. Must be arm length transaction. If the lender who lost money in it he is likely to go after you and him purchased at lower than the loan balance.  Bottom line is do not do it. 

With respect Sam, i totally disagree with you. If the buyer, buys at auction, whether the lender got paid in full or not, the buyer is the owner and can rent it out to cattle for herding if he/she wants to. He can move his kids in for free, let the previous owner stay rent free, rent it to the previous owner or whatever he wants to do with the property that he owns, free and clear of any liens/encumbrances. 

There is a potential rule where, if the buyer turns around and SELLS it back to the defaulted party, the lender may have a claim to go back after the previous owner and reinstate a lien, but nothing about renting it back to them and, I've only seen that happen in short sales, never in a foreclosure sale.

Heck, for that matter, the borrower can be the buyer at their own foreclosure sale if they want, and if its in California or any other anti deficiency state, they get the benefit of buying it back for less than what's owed. Granted, the chances of that happening are slim to none but, there are no prohibitions against it.