Lets say that there is a homeowner that has a house worth 100k and he owes 50k but he has 10k in back payments but he is willing to let me take over his mortgage payments but he wants 10k. Which equals to 20k to get the deal. Can you pay the homeowner's backPayments and once you get the title, refinance and pay the seller 10k from his own equty?
I don't see why not. Just have a real estate attorney draft the agreement in that manner.
Disclaimer: I've never personally done this, but it is my knowledge from research on the matter.
@Account Closed In your example, why would the homeowner agree to your deal? If there's equity and he's too lazy to sell the property himself, he can let the property go to sale and collect any excess proceeds without lifting a finger. In your example, the lender would foreclose, keep $60-$65k of the total debt and the borrower would be entitled to the excess. If the property goes for $80k at the auction, he makes $15k-$20k.
Another question: why would you lend or advance the money to an uncreditworthy and desperate borrower? To me, that's a huge risk with limited upside. Unlike the traditional fix and flip investor, you run the risk of a borrower who will come after you legally once he gets the money to take away the immediate risk of foreclosure. He's your friend when he needs the money but will hire an attorney if he thinks that you took advantage of him to take his equity.
Always risky to do Sub2
@Andy Mirza so, if I dont give the homeowner anything.. am I safe?
@Andy Mirza ill tell him " John.." yes?
"Are you considering buying a home in the next few years?" Yes. "And.. Do you think that i house being sold at auction will allow you to do that?" No. "Thats why we need to do this John." " when do you want to close?" "On October 25th or October 30th?" Octover 25.