Too Creative for Investors?

[Brad Ericson]

I posted this same scenario in a different forum category, but I think this section makes more sense as this is not a traditional deal. 

I would like to enter into a purchase, leaseback and repurchase agreement with someone. This would be a short term deal (12 months) with a 16% ROI and full return on investment capital for the investor at the end of the deal.

Investor purchases my property at $350k (comps will be provided). The investor leverages their cash position at a financial institution of their choice and puts 20% down and pays the appropriate closing fees (total of ~$75k).

I would sign a tenant lease agreement with the investor for 1 year valued at whatever the monthly loan amount from the loan above, my rough estimation would be ~$2,000.

ROI details: I would pay the investor $1,000 monthly interest payment on top of the loan payment to the bank. Totaling $12,000 in monthly payments directly back to the investor.

Then at the end of the 12 month period, I would purchase back the property at the same valuation ($350k) and the investor would get the initial $75k back in a lump sum after the transaction closes.

So, the investor would receive a total of 16% ROI on initial investment over a 12 month period, plus receive the entire $75k initial investment back. 16% ROI = $12k/$75k

I feel this is a lower risk deal and a clear & quick exit strategy for someone that just wants to make some cash flow without tying up their capital for a long term period.

Is this too "creative" for an investor? Thanks so much for your time in reading and/or replying.

[Chris Seveney]

Quote from @Brad Ericson:

I posted this same scenario in a different forum category, but I think this section makes more sense as this is not a traditional deal. 

I would like to enter into a purchase, leaseback and repurchase agreement with someone. This would be a short term deal (12 months) with a 16% ROI and full return on investment capital for the investor at the end of the deal.

Investor purchases my property at $350k (comps will be provided). The investor leverages their cash position at a financial institution of their choice and puts 20% down and pays the appropriate closing fees (total of ~$75k).

I would sign a tenant lease agreement with the investor for 1 year valued at whatever the monthly loan amount from the loan above, my rough estimation would be ~$2,000.

ROI details: I would pay the investor $1,000 monthly interest payment on top of the loan payment to the bank. Totaling $12,000 in monthly payments directly back to the investor.

Then at the end of the 12 month period, I would purchase back the property at the same valuation ($350k) and the investor would get the initial $75k back in a lump sum after the transaction closes.

So, the investor would receive a total of 16% ROI on initial investment over a 12 month period, plus receive the entire $75k initial investment back. 16% ROI = $12k/$75k

I feel this is a lower risk deal and a clear & quick exit strategy for someone that just wants to make some cash flow without tying up their capital for a long term period.

Is this too "creative" for an investor? Thanks so much for your time in reading and/or replying.

 where the risk comes into play is the value - if its worth $350k I would not pay $350k for it because if you cannot buy it back in a year I could be stuck with it, and right now austin prices are dropping year over year. As an investor I would do it at 70-80% of value.