I looked at a home that I found fairly nice but after some discussion with the homeowners I'm not sure there's a deal here. I'm seeing @Brian Gibbons post about lease options but I feel like I may run in to some problems with that.
Here's the deal:
Left on Mortgage: $85k
Market Rent: $1100-$1200/mo
My guess on their PITI: $670
So, they are stuck in this house and motivated (as they have already moved out). This is a retired couple and I'd like to help but I need to make a profit.
Some notes: Somehow right at the top of the bubble they refi'd to around $110k which is why they are so upside-down. That may imply that there is more value in the property but I did comps as best I could from recent Zillow sales and I'd rather be conservative.
I have seen @Brian Gibbons talk about lease options and lease option assignments and I mostly understand how the numbers work there. It's intriguing but I believe you run the risk of the original bank calling the loan. It is Chase bank so I suspect that they would call it (ie: big corp = not very flexible + rising interest rates providing incentive.)
I do not have the resources to refi the loan if it is called. The people I'm buying from don't have the resources either.
So, should I just walk away or is there a safe way to do this? Maybe go talk to the local Chase branch manager?
Maybe a "master lease" without option? I'm not sure there's enough juice to squeeze for that.
Maybe a "master lease option" with a mix of repair options: ie: if it's an expense above $1000 they have to pay for it otherwise I would?
Lease option it from them for with a lease payment equal to the mortgage payment cost. The strike price can follow the declining principal balance. Put a renter in there and ride the mortgage until you have clicked through a big chunk of the principal. They simply walk away without having to go through a short sale or pay out of pocket to sell the place.
That does sound nice. Any hints on how to avoid running into due on sale clause?
Why would you trigger a due on sale? You're leasing the property.